Hi Doc, hope all is great. I was meaning to ask your opinion. I'm in FB puts and might sell next week and have been interested in the jan 13 32 calls. The price is "cheap", .40's per option. If it goes up two bucks, then it'll be around 1.20's. Almost a three bagger. Because I was out of agnc for a while until that recent trade, do you think agnc can get to 32.40's by late December? I know it's a crapshoot asking about future prices, but it's good to keep an eye for such things. I messed up on grpn, holding that till later, but at least I put 10% of monies there. Thanks, and no worries I'll do what I think is right, but to me it seems like its not a bad play.
You know me ...ever optimistic re AGNC. You'd think with all the dire posts you should steer clear of even coming out from under your bed, these days...maybe they are right...;-) Reminds me of the worried look the Straw Man had when locked arm in arm with Dorothy on the Yellow Brick Road.
The Fiscal Cliff is the meeting room in the Emerald City with the Wizard. Congress is behind the curtain pulling all of the levers, and they, just like the Wizard, don't know what the hell they are doing...that is concerning...but no less predictable...they, like the Wizard, will go sailing off in their own Balloon(Private Pensions/Private Health Care), and leave us waving up to them as they sail away, leaving us the #$%$ ACA(health plan), and a bankrupt pension plan(SS). Pretty depressing...oh, your question...;-)
I think we will get the Gala Fiscal Cliff Ball to attend for the next 48 days. It will be a cross between Obama's Victory Celebration and Woodstock. Obama, because he will blame everyone else for lack of compromise(much like his campaign thesis) and Woodstock, because the party will go on for day after day after day after day, with everyone nauseated and hung over with headaches for a 48 day gig, as the Cliff approaches, consummating with a lot of worry and vomiting as the 31st of Dec arrives with no accord. Alas, near the close of business on the 31st, a compromise will be reached.
Now AGNC will have gone EX before this. On other threads I have mentioned that I believe AGNC will climb to EX, then sell off hard as the 31st approaches. My thought is to join you, but on the Dec Bull Call Spread for .50. BE @ 30.50, max loss .50 @ 30.00, max profit .50 @ 31 all by Dec OPEX. I expect 35+, but I am a pragmatist and like to err on the side of caution. I can believe really well on 31 by OPEX. I have other spreads I need 33 on. If those don't work, I have these other spreads that will bail me out at 31.00. If weakness continues, I will add more at 29.50 and 29.00 BE's by OPEX.
29.00 is a 17.24% yield. I don't think even the Tin Man will stay under the bed at that yield...;-)
Here's the other element to all this. Unlike qualified dividends, which are taxed at the 15% rate, the REIT distributions are taxed at the regular income rate already. The fiscal cliff won't matter there. It does matter in terms of LTCG, but at this juncture, I think it's too late to sell. That decision should have been made a couple of weeks ago. At this point, it's a hold.
Thanks again for your great advice. Keep telling everyone to buy, buy, buy. Avg down from 35 to 33, to 31, to 29, to 27, to 25, et al. Great advice. Where'd you get your "doctorate"? Over the Internet? LOL!
I'm also slightly optimistic.
My hope is the reits that can differentiate them selves in these challenging times will be rewarded.
AGNC is a good example.
But it's hard to tell. If the whole sector is getting hammered, everything will drop to some degree.
Thanks again for your colorful and helpful insight. It is really great to rely on friends and you are a dear one to me. I'll hope for gs and ms to raise the fb price artificially to add more puts and then hopefully by next week we'll have a chance to add more to agnc. Good luck my friend and thanks again,