4,556 have traded so far today, and this happened yesterday:
Chimera Investment is at its highest levels in nearly two years, but at least one large trader is positioning for a potential pullback in the real-estate investment trust.
optionMONSTER's Depth Charge system detected the purchase of 9,033 September 3 puts for $0.15 yesterday. The volume dwarfed the strike's open interest of just 121 contracts before the session began, so this is clearly fresh buying.
CIM closed fractionally higher at $3.17 yesterday. The stock peaked at $3.34 on March 26, its highest intraday price since July 2011.
Yesterday's long puts weren't tied to any stock trading identified by our systems in the session but, given how far CIM has run, they could have been bought to protect a long position established earlier. If not, they would be making a straight bearish bet that the stock will decline in the next 5-1/2 months.
Each 4000 contracts purchased represent an investment of $60,000. That suggests than the buyer has a good deal of money to play with. Given the market fundamentals going forward, I can't see how anyone could think that purchasing insurance at this cost could be profitable, suggesting that they have some reason to believe there's a bump in the road ahead.
I will be very surprised and even more suspicious if this trade turns out to be profitable.
I was wondering what information someone might possess that would cause them to believe that CIM will drop below $2.85. I came up with these possibilities:
1. CIM fires FIDAC without a good alternative.
2. NLY announces that they have no interest in acquiring CIM and will enter the non-Agency RMBS market without the involvement of any persons connected with CIM.
3. A major lawsuit is expected to be filed.
4. Another GAAP rule violation was discovered.