DIFFICULT MARKET TO TRADE...BETTER OFF TO BUY AND HOLD
I know this may be a repeat message but in a market where interest rates are low and for the near future will most likely remain low, it is, in my opinion, much more difficult to be involved in options because they Prosper in markets that are more volatile with more risk-taking. Take a look at the number of contracts for REITS....It's a pretty small number compared to much more heavily traded securities like facebook. Those of us who have bought and held, I think, will prosper. Best to all. Dr.ehc
It's disturbing to see these things trade at unprecedented yields (for REITs). Most got the move wrong.. if they continue to enter into those awful pay fixed recv float swaps.. I'd be out no matter what the discount was. You know where that money went? To shareholders of most PIMCO cefs. I think in specific, PKO.. They were the other side of most of those swaps..
Given where book is, where leverage is, the distribution as a % of book.. It's quite a lot of risk for a historically smaller reward. Would you be accepting the same asset yield.. purchasing the same things if you had the repo market on tap?
If they free up asset yield from the grips of their "hedges".. then things are fine for now. The next issue is inflation; real returns from MBS, given what this toliet paper currency has done in the past few days. I wish one of these REITs would think to venture outside the US. if only to take a look at the opportunities available.
Given where the dying dollar is at.. I've been adding to NDRO.. strange that this sold off. I think it's on oil price. But people who buy/sell this know very little about it.. so.. it sometimes offers days of mispricing. Has an average yield that is above the REIT sector too.
I hate knee-jerk moves like this. Although MTGE isn't too exuberant. and AI is hiding in it's own corner of the market. So... There are "new" June 21st options for cycle 2 (i think it's cycle 2) stocks. Anything that had a march option calendar... now has a june 21st.. Everything else got December.