Seeking Alpha
Profile| Send Message|
( followers)  

By David Russell

Put volume surged in Anworth Mortgage Asset (NYSE:ANH) yesterday, but the activity seems to be bullish.

Our tracking programs detected the purchase of more than 3,000 April 7 puts for $0.25 against open interest of 1,900 contracts. The trades occurred in the final hour of the session at the same time that stock volume spiked amid heavy buying.

ANHThe activity in both the puts and the equity suggests that investors were building positions in the shares and using the options as protection.

ANH ended the day up 1.44 percent to $7.05. It's been grinding sideways in a range for more than a year but has started trading in a tighter range since May, making higher lows and lower highs. Some chart watchers may consider that kind of consolidation the prelude to a move higher or lower.

The company is organized as a real-estate investment trust but owns mortgage securities rather than properties. Its dividend yield is about 13 percent a year, which seems quite high given how low interest rates are in the bond market.

Most other companies in the sector, including Annaly Capital Management (NYSE:NLY) and Chimera Investment (NYSE:CIM), may appear undervalued to some investors because they also pay big dividends but haven't participated in the recent market gains.

The put buying drove total options volume in ANH to 23 times greater than average yesterday.

Disclosure: I own CIM shares.

Source: Bulls Cautious on Anworth Mortgage