By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The latest knock to the shares of New York Community Bancorp sent traders in the options market looking for defensive positions with renewed gusto on Friday.

New York Community Bancorp shares plunged 24% on Friday after it found “material weaknesses” in internal controls related to its loan review, rattling investors already fretting over its commercial real estate (CRE) exposure.

New York Community Bancorp options trading volume jumped to 171,000 contracts by 11:10 a.m. (1610 GMT), with contracts changing hands at two or three times the usual pace, according to Trade Alert data.

With the shares trading at $3.62, put options that would guard against a dip in the share price below $3 and below $2.50 by Friday, March 8, were among the most heavily traded contracts.

“We are seeing lots of defensive positions being opened,” said Steve Sosnick, chief strategist at Interactive Brokers. “Those buyers are betting that the situation will continue to worsen in the short term.”

With the stock down more than 50% for the year as of Thursday’s close, short sellers were already up about $150 million in gains for the year, according to an estimate from data and analytics company Ortex.

Friday’s selloff could see those gains jump by around $43 million if the share price losses hold, Ortex data showed.

The bearish sentiment appeared relatively restricted to New York Community Bancorp contracts. Options on the SPDR S&P Regional Banking ETF drew more balanced trading activity, according to data from Trade Alert. KRE shares were down 1.6% on Friday.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Kevin Liffey)