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American Capital Agency Corp. Message Board

  • olee2116 olee2116 Oct 25, 2012 9:51 AM Flag

    I'm holding my MLPs after ex

    I can't stomach taking a 40-70% loss right now. It looks like too many people know about the div run and it's not happening since everyone is trying to get out ASAP...

    I looked at the charts and there were a few quarters when they went up after ex instead of dropping. Elections are 11-6, and my options expire 11-17, so we will see.

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    • Hi Olee,

      Sorry about the MLP loss. I still think exiting B4 EX is the best bet with all of the MLPs , esp CQP. Unless you have Dec options, I cannot see a Q, going back four years, where an exit post EX is profitable. As in the predicted run up to EX, I may be wrong, but historical odds say the next few days will be the best exit on the Nov contract.



    • Olee,

      I wish you well and hope you get on better footing. I was one who encouraged you last year to try trading options. I never said it wasn’t risky, but you need to know what is going on to be successful. Unfortunately you jumped in with both feet and tried to participate in way too many trades, probably for not wanting to feel left out. It takes a lot of personal strength to not jump on the bandwagon when it looks like everyone is playing.

      As Ben (remember him) said many time, MLPs do not trade like the MREITs. There is a perceived difference between receiving a dividend and receiving a distribution. The dividend is money the company earned and is passing some of it on to you. The distribution is your investment money the company is returning and therefore reducing your basis in the unit (stock). You only pay gains or take losses when you sell the MLP units. The buying and selling of MLP units and MREIT shares are perceived differently. Betting on the dividend run (MREITs), not distribution run (MLPs), is the least of the two risky actions. But it’s still a risk.

      Olee, I hope you can find your comfort trading path. I think you are very bright and will find your way back to successful trading.



      • 1 Reply to rimboomer
      • I was doing just fine before. I lived frugally and put my excess into dividend stocks. If I got a big hit in cap gains, then I sold for profit, if not I collected dividends every quarter. I was on the path of reaching financial security by 45. Well, it's more like 50 now...

        I don't drink, smoke, do drugs, gamble. Well, I learned about gambling with options. Once I made 8k in one day, I transformed from a careful fundamentals investor into a gambler.

        Like I said, no such thing as a free lunch. I don't blame anyone, I'm a man, and it was my decision to go into options. But don't sell me any #$%$ that options are this great vehicle for making money and downplay the risks of options.

    • assume you're talking CQP? The bid/ask spreads have been frustrating....I got out with 50% loss on 1/3 yesterday. holding the rest to see what the rest of the week has to offer, but as I said in a previous post, I may be holding past EX as well.
      Good Luck

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