That makes a lot of sense, thank you for clarifying it. Also thanks on the PSEC note, sounds like a winner trade...
Doc, you trade a lot of options, isn't Fidelity biting your profits with their high commissions? I'm still shopping around for brokerage for options and looks like OptionsHouse has cheapest commissions, but I see you and onion are with Fidelity. OptionsHouse has bad consumer reviews though..
Any recommendation on brokerage?
The folks that bought Jun28Calls at the last SPO are the winners over my 28/29 Bull Call Spreads. I had 400 spreads.
Spreads are ideal if you plan on holding till OPEX and the stock stays still. I'm talking about ITM options. When the stock takes off like AGNC has the leverage increases with the straight Calls because the profit is capped in the spreads by the short leg. You know how much your max profit is when entering the trade.
On my eg the PPS did not have to go above 29 and I make the same. No advantage for PPS 31 or 50, my profit is capped. So when the 28 straight Call buyer, @ 1.80 cost, has the PPS stall at 29.80, he's cooked if he holds to OPEX. His 1.80 cost is gone. Whereas I keep everything on my Spread.
So the advantage of the spread is when the PPS goes up to the short leg strike and no less. So less travel up in PPS for profits, cf to the straight Call buyer.The PPS goes above the straight Call buyers BE(28 +1.80) and his potential profit is unlimited as we are witnessing...;-) Go AGNC and all you Longs!
Right, from what I'm reading about bull call spreads they are ideal for stocks that move 5-10% and calls are better for higher percentage gains because they don't have the profit cap spreads have. So with AGNC and MTGE looking at the SPO till EX interval, isn't that about 10% gain? Since spreads are much cheaper then calls doesn't it allow you to buy more spreads then calls thus higher profits? Less risk with spreads too?
I'm newbie to options.
Nice flight to safety today after yesterday's volatility in the rest of the market.
A portion of my May 32calls just went for 4x to pay the bill on the remaining 32's which I can now let run short of opex.
For a while it looked like 32 in May was only a dream... maybe it is a dream.