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American Capital Agency Corp. Message Board

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  • reits_r_us reits_r_us Nov 16, 2012 5:30 PM Flag

    OT: NYMT / NLY CALLS

    Hey XX,

    I am not understanding your discussion re. the Calls not having the dividend priced in. Puts have the next series of dividends priced in, increasing their price to contract OPEX. Calls theoretically should be priced less the further you go out (re the dividend), as the long share holder reaps the dividend each month on NYMT, whereas the long Call holder misses out on that same amount each month.

    That is the reason I prefer Long shares or short Puts on the monthlies as, in each of those cases, you collect the dividend(ie, Puts have the next series of dividends included in their premium). I understand about wanting to capture CA on a beaten down PPS, but was confused about your discussion re the dividend.

    Cheers,

    DocReits

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