Volume-weighted average price analysis shows ORC trading slightly below its 20-day moving average, with the forecast suggesting a retest in the next two weeks if market volatility eases. This specialty finance mortgage real estate (mREIT) company, which invests in residential mortgage-backed securities (RMBS) on a leveraged basis, offers favorable long-term stockholder returns and a substantial dividend yield. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends. Because the $1.50 strike represents an approximate 12% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 72%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract . Should the contract expire worthless, the premium would represent a 26.67% return on the cash commitment, or 40.90% annualized — at Stock Options Channel we call this the YieldBoost . Analysts’ ORC stock price forecast incorporates rising hedging costs, which might pressure Q3 earnings per share. The balance between dividend payout policy and capital preservation will likely drive sentiment in the mortgage REIT niche.
