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American Capital Agency Corp. Message Board

  • bertegle bertegle Jan 21, 2012 11:50 PM Flag

    What Happens After A SPO?

    A lot of us on this board waiting for the next SPO, why because the PPS usually drops, but not always. Jan 13, 2911 the PO anouncement PPS was 28.64, the next day it went up .36 to 29.00. Does anyone have any idea why?
    I also would like to get in after the next SPO, hopefully this rare occurence doesn't repeat. GLTA

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    • Was the last SPO in Apr 2011? Was there one in Jan 2011? How many SPO's have there been and when? Anyone have an opinion on whether there will be one before the next divi in Apr? I own a lot of AgNc & want to buy more but will wait if an SPO seems likely.

    • Doc Yes that was a big help. I checked and found out that you were right.I was only looking at the big volume day, before and the big volume, never thinking to look more than one day. I feel a lot better that I can get in at a good price. Been reading your posts. Not ready for options the way you can do them. What put would you buy for AGNC?

      • 1 Reply to bertegle
      • Hi Herbert,

        I have licked too many wounds buying Puts. Blood tastes nasty...;-)

        I have my reasons for not buying Puts unless I suspect incredible movement in PPS(10-20%). Even then, the premiums are very high and the Delta(Premium dollar movement per dollar movement in PPS)is usually low.

        I was surprised that the veterans here bit on this notion of a SPO. Yes it is very likely but not a certainty. What is a 99% certainty is that we are still range bound. TRADE THAT everybody!!!!

        So when we reach these lofty heights(The new range is 27.50-29.50) write Calls(see my "crumbs" trade). When(IF) we have an SPO write Puts and THEN purchase Calls or Bull Call Spreads. Trading like this ***after the fact*** of PPS movement increases dramatically the kill rate(success) cf. to hoping for an SPO and wasting valuable dollars on worthless Puts.

        (Aside...I plan on purchasing Puts on EVEP on Wednesday IF we see 70+(75 Puts), (because I suspect a 15% decline). I will then cover by writing Puts, further out, the very next day on EX(65 Puts) to hedge against the PPS not declining as far as I would hope.)

        Anyway, hope that helps...


    • Jan 13th was an anomaly . The announcement is usually made after the close of trading for the SPO and the shares are offered the next morning.

      So on the 12th the PPS was trading at close @ 29.68 . Word released for spo and we wait on the 13th. The shares weren't released until the next day after the 13th(14th). Word was out and the SPO fizzled on the 13th . Note volume difference between 13th and 14th.

      The shares never traded down to the normal discount( I think, in part, from the confusion) and the lowest you got them for during normal trading hours was 28.36 on the 14th. That was still 1.32 discount from the close on the 12th, but not the typical decline.

      Out of last 5 SPO's that was the fizzle.

      Hope that helps...

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