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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Oct 13, 2010 3:00 AM Flag

    BOUGHT WCRX @ 21.50

    Good for you Apache! I was one of the guys trying to figure out how to play the option strategy pre-ex-div on the blockbuster $8.50 dividend. I learned a lot from USC poster on WCRX board and by ff/up research on special dividends that exceed 25% of the PPS found:

    FWIW...that it is one of the few times that the option board can actually change the value of the cards in your hand on the EX-DIV date.

    An example would be if you had held an Oct30Put with the PPS @ 29.28 on the close of Sept 8th thinking whoopee I'm going to be 8.50/contract richer tomorrow. Sure enough the PPS the ff morning was 20.70 on the open, but that sweet Oct30put had been reset to show you were now the proud owner of an Oct21.5Put(8.50 less).

    So instead of jacking up the price pre-ex on the premium they run the scope up on your other end..sorry, by reducing the numerical value of the option you already own.

    You did it right and if I had any sense I would have been buying calls on the morning of the 9th...coulda..shoulda...

    Once again ..Congrats!

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