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New York Community Bancorp Inc. Message Board

  • catspaw33129 catspaw33129 Sep 17, 2013 1:30 PM Flag

    NYCB Call Options

    Are a good alternative to owning the stock. You will not get the dividend but you can control many more shares for a fraction of the cost of a share. Before buying options make sure you have educated yourself regarding
    Options. Know all the Pros and Cons regarding risk etc. DD.

    Sentiment: Strong Buy

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    • I disagree! you will loose money buying options here...Hold the tock, collect the NYCB $1 annual dividend and sell a covered call for another .75 to $1

      • 3 Replies to biglefthook_00
      • I don't see the logic here with the pps at $15 and I sell OTM CC's as part of my strategy in a large income producing portfolio ~ Maybe I'm missing something here but I'll think out loud for a minute...

        Your strategy calls for selling the CC's for .75c to $1 ($15 strike) and as of today the Jan 2015's are .65c and the Jan 2016's are $1...If you are into the stock for say $12.50 pps or so and "not married to the stock" and don't depend on the dividend as part of your overall portfolio strategy, and don't care if you are called off your shares, then I guess I can see your idea here (at $15 pps I can't see the logic)...With selling the CC's you could get called away early missing the divs, there could be a spike in the pps and you'd miss it ( you could "cover"), OR there could be a buyout offer which could appreciably move the pps (again forcing you to cover at a much higher premium to retain your shares)...Conversely the pps could move down over a yrs+ time allowing you to retain your shares, retain your CC premium (always get to keep that for the newbies that don't sell CC's)), collect the divs, and restart the process all over again once the contract has expired...

        You are selling ITM (In The Money) or ATM (At The Money) CC's and trusting you won't get called away early so you can collect the dividend ~ The problem is you've got to go out over a years time to get the .75c -$1 per share premium you discuss ~ Personally I wouldn't employ this strategy (I'd do it on $16-$17.50 strikes if they were available and could get a decent premium) but if it works for you with your share block (or part of your share block) and you're making money with it more power to you...good luck to all!

      • I have posted this same suggestion for years.

        NYCB is stuck,,selling a $15 call for .75 to $1 is a good move

      • spartacusad@rocketmail.com spartacusad Sep 19, 2013 1:02 PM Flag

        What calls and what month?

 
NYCB
15.72-0.01(-0.06%)Aug 20 4:02 PMEDT

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