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American Capital Agency Corp. Message Board

  • reit_freak reit_freak Dec 20, 2011 6:16 PM Flag

    Thank you, AGNC Message Board community!

    I would like to offer sincere thanks to all of the contributors to this excellent discussion board. I have been a daily reader since early this year, feeling more than a little selfish to be constantly “taking” from the tremendous knowledge and exchange of ideas and lessons learned, all without offering any contribution in return. My lack of input to the discussion can be summed up along the lines of the old “Better to be silent and thought a fool than to speak out and remove all doubt” wisdom. After a couple of decades as a classic, highly (excessively?) diversified “buy and hold” mutual fund investor, I’ve only recently become a much more tactical hands-on trader. My arrival at the AGNC BATESAT shrine was the result of a lot of research seeking stocks that tend to move in fairly predictable channels, which led to a focus on high-dividend stocks, which naturally led to REITs, and ultimately to MREITs and AGNC specifically. I then began modeling different strategies for playing these dividend cycles, and arrived at options (which were new to me nine months ago) as the obvious choice. In Q2, I experimented with AGNC, NLY, IVR, HTS, and TWO – not fully appreciating the criticality of the “agency” distinction, and learning some hard lessons regarding volatility (you know, buying Puts in a crude, unenlightened attempt to play the post-ex-div pps drop!). In Q3, I narrowed it to just long calls on NLY and AGNC, and in the current quarter, just AGNC. I’m still employing a very simple (and admittedly risky) straight long call approach – buying ITM calls expiring the month after ex-div date.

    In the spirit of sharing, my results this quarter were as follows:
    • JAN12 $24 calls: Bought @ $2.05, Sold (Friday 12/16) @ $4.90, Gain = 139%
    • JAN12 $27 calls: Bought @ $1.15, Sold (Friday 12/16) @ $1.90, Gain = 65%
    • Shares: Bought @ $27.45, Sold (Monday 12/19) @ $29.10, Gain = 6%

    In the upcoming quarter, my plan is to go strictly with Calls expiring in June. As I have not yet devised a statistically defendable method for choosing the best strike prices to play, I am currently looking at combinations within the 24-27 strike range, but have not yet locked in my detailed plan. I would absolutely welcome and appreciate hearing about any processes, rules, and/or rationale that others use in making these decisions.

    Finally, at the risk of boring you all further with even more “I” and “me” stuff, "I" will offer a little more of a profile of myself, as I know some of you are curious about the readership of this great message board (and because I’m going to be hanging around this board for a long time!): I am an Air Force veteran, spent about 30 years in the information technology industry, live in the Chicago area, love blues guitar and the Green Bay Packers, and I turn 50 years old later this month!

    Thanks again everybody. Have a blessed holiday season and a healthy, prosperous year in 2012!

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    • Thanks for your service Reit Freak. I'm sure the Air Force had you in San Antonio at least once. Good friend was a combat arms instructor at Lackland for a year.

      • 1 Reply to john_mrks
      • Congratulations on your call trades and welcome to the board Reit Freak! I was an Army Nurse but I did get to spend some time at Lackland attending their Instructor training program and it's a lovely base to be sure. This board is a great place to learn from the many seasoned options traders who are thoughtful enough to post their strategies. Although I've only just dipped my toes in with covered calls (very successfully so far) you've inspred me to think about buying some calls as well. Please keep sharing how you're doing with us!

    • Great Job Reit Freak! Thanks for sharing and happy holidays to you!


    • Freak,

      Great job on your trades and thanks for serving. I was in the AF from Aug 1966 to May 70. Got out to go to school and never looked back. Great experience and I survived. That's what counts. There are other AF veterans (and other branches) on the board. Don't be afraid to share with us your ideas and trades. Always open to suggestions. That's the way we roll on this board as you have seen. We aren't always right, but we keep trying to get better.

      GL2UA and go AGNC.


      • 1 Reply to rimboomer
      • AGNC is the cream of the crop! Management deserve credit.

        Remember, part of the success is we are in a low interest environment since 2008. The situation will change in late 2012 and later years.

        SEC doing its study on mREIT which caused a mild setback 2nd half of 2011.

        With options, there is a time limit of expiration. Buying the shares, you can dollar-cost average at lower prices without time limits.

        4th quarter was a challenge since AGNC will find it challenging, if ever to go back >30.xx.

        I'm lowering AGNC peak as 29.50-29.75.

        Been successful with NLY, CYS and HTS. Avoid IVR as the divvy went from $1 to $0.65 along with losing about <30%> of your principal.


    • freak, you are a freak. You just "happened" to luck out in ALL of your endeavors, investing included. First off, being a veteran of the Air Force puts you in my "safe" category as I am a veteran of the US Navy. You and I did NOT take any risks being there. Your "investment" acumen is derived on pure luck. You have not invented "calls" buying or selling. Its your timing that is stupendous. Thats what it takes....timing, with luck. You've been at this for nine months. Come back to us in nine years and then give us your stats OVERALL and I hope you can give us four positive paragraphs like you just did.Goog luck.I am also long on on AGNC.

    • Great work! I just stick around for the 5% / quarter. Great stock, great returns!

    • great

    • Fantastic, the more knowledge the better. I think everytime we get more people on the board that have been trading, the better we all do.


    • Welcome and well done on your trades. Your example following is a prefect illustration of the difference between trading shares and trading options:

      >>>In the spirit of sharing, my results this quarter were as follows:
      • JAN12 $24 calls: Bought @ $2.05, Sold (Friday 12/16) @ $4.90, Gain = 139%
      • JAN12 $27 calls: Bought @ $1.15, Sold (Friday 12/16) @ $1.90, Gain = 65%
      • Shares: Bought @ $27.45, Sold (Monday 12/19) @ $29.10, Gain = 6%">>

      Even though you captured more than a dividend (1.65), you made 6%. Comparing that to your other gains in options speaks for itself.

      May your option cornucopia continue to overflow!

17.53+0.29(+1.68%)Feb 12 4:00 PMEST