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American Capital Agency Corp. Message Board

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  • grnthmb55 grnthmb55 Dec 13, 2010 5:46 PM Flag

    Buy The Shares vs Options?

    I just want to point out that even when AGNC did cut their dividend from 1.20 in December 2008 to .85 in March 2009, the stock price still moved from 16.30 on Feb. 27, 2009 to 17.81 on the day before ex (March 30th).

    I like the strategy of buying near the opening bell on the last day of the month prior to ex-dividend date, and selling on the day before ex-dividend around close. If this strategy was used, here's the gains you would have realized on the stock price during that period during the last two years:

    September 2010: +2.19
    June 2010: +3.24
    March 2010: +3.01
    December 2009: +2.45
    September 2009: +5.28
    June 2009: +4.25
    March 2009: +1.51

    Given this history, I'd say a $2 run from $29.43 (open price on November 30th) is not only completely possible, but pretty likely. Especially given how fast the stock recovered from the shares released last week, I think we're going to be in a strong upward trend until the ex date. Personally, I trade options... with a stock this predictable, I think call options are a fairly safe bet and will make a lot more money than the stock in the same amount of time.

 
AGNC
20.75-0.05(-0.24%)May 22 4:00 PMEDT