Hatteras draws last-minute buying

Mike Yamamoto (mike.yamamoto@optionmonster.com)
August 19, 2013

A trader rushed in to take a bullish position in Hatteras Financial just before the closing bell on Friday, looking for a rebound from record lows.

optionMONSTER's Heat Seeker system shows that 1,704 November 19 calls were purchased for $0.50 to $0.55 in the last 7 minutes of the session. Open interest in the strike was just 294 contracts before the trade appeared, so this is clearly fresh buying.

These long calls lock the price where the stock can be bought through mid-November no matter how far it might rise. They could be sold at a profit earlier if premiums rise with a rally before then, but the contracts could also expire worthless if shares remain below $19. (See our Education section)

HTS fell 3.12 percent to $18.31 on Friday, an all-time closing low. The mortgage real-estate investment trust has been hit hard along with many other so-called mREITS as shown on our researchLAB analysis tool, falling from above $28 in the last five months and gapping down after announcing second-quarter results on July 23.

Total option volume in the name wasn't huge at 4,456 on Friday, but that is still more than 2.5 times its daily average for the last month. Overall calls outpaced puts by more than 5 to 1.

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