Arbor Realty Trust (ABR), a real estate investment trust, saw its stock drop by 12.64% after reporting earnings on 31st October. Although the company surpassed earnings per share estimates by 50.90%, it missed its revenue target by 27.23%, largely due to increased delinquent and modified loans.

The stock closed at $10.09, just above a crucial support level of $10.01. If this level holds, the first resistance at $11.44 can be targeted. However, failure to maintain this support could see the price fall to $8.94, $8.43, or even $8.02, all of which are notable support points based on technical analysis.

Market watchers are focused on the $10.01 level, as its defence is vital to prevent further decline. With no major support below until the range of $8.94 to $8.02, the situation remains tense for those following the stock’s performance.

These technical levels are significant for traders assessing the risk of holding or entering positions in this stock, especially considering the volatility inherent in the real estate investment trust sector amid fluctuating market conditions.

Following the sharp 12.64% drop last Friday, we’ve seen a significant spike in implied volatility for Arbor Realty Trust options. This reflects deep uncertainty around the company’s margin compression and the stability of its commercial loan portfolio. The market is now pricing in a potentially large move as the stock tests the critical $10.01 support level.

Recent data from the third quarter of 2025 reinforces these fears, showing commercial real estate delinquencies climbing to 5.8%, a level not seen since the aftermath of the 2020 downturn. This trend is worsened by the Federal Reserve’s hawkish tone, which suggests borrowing costs will remain elevated into 2026. These macroeconomic headwinds provide a strong fundamental basis for the stock’s recent weakness.

For those anticipating a break below $10.01, buying December or January puts with strikes at $9.50 or $9.00 offers a direct way to profit from a move towards the $8.94 or even $8.02 targets. A bear put spread, such as buying the $10 put and selling the $8.50 put, could be a more capital-efficient strategy to hedge against the high volatility. This approach limits the upfront cost while still capturing much of the potential downside.

Conversely, if we believe the $10.01 support will hold, the inflated option premiums present an opportunity. Selling cash-secured puts with a strike price comfortably below current levels, like the $9.00 strike for January 2026, allows us to collect that rich premium. This strategy expresses a cautiously bullish view, essentially getting paid to agree to buy the stock at a discount to its current price.

We must also consider the growing market chatter around the sustainability of ABR’s high dividend, which could be at risk if loan performance continues to deteriorate. This situation is a direct consequence of the aggressive interest rate hikes we saw back in 2023 and 2024, with the credit impact now fully materializing for lenders. Any announcement regarding the dividend could serve as the next major catalyst for the stock’s direction.