Market News

December 11, 2012  Tue 10:04 AM CT

A put spread tops the option trading in Annaly Capital Management as shares of the real-estate investment trust slip today.

A trader bought 4,000 July 13 puts for $0.75 and sold the same number of the July 11 puts for $0.26, according to optionMONSTER systems. The volume at each strike was more than open interest, so this is a new vertical spread. (See our Education section)

The position cost $0.49, which is the most that can be lost if NLY holds above $13 through expiration. The maximum gain of $1.51 would come with the stock below $11.

NLY is down 0.75 percent to trade at $14.57. Shares have been in a relatively tight range in recent months. Before that the stock had fallen from a 52-week high of $17.75 in mid-September to its 52-week low of $13.72 in mid-November.
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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