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American Capital Agency Corp. Message Board

  • xionrevolutions xionrevolutions Nov 22, 2012 6:02 PM Flag

    I'm in AGNC with 4,914 Call Options...let's Rock n Roll : )

    Just letting you guys know that I'm back on board our beloved ship, the USS AGNC. I went in yesterday. I'm in with 3,913 Agnc December 2012 $31 Calls which I bought for 0.99 , 1,000 Agnc $32 Calls which I bought for 0.55 , and am holding $50k in cash as backup. My goal is to sell at the peak of the Agnc dividend run up, my target price is $33 and I plan to exit there. I plan to sell my $31 Calls for 2.00 and my $32 Calls for 1.00. I wish you all a Happy Thanksgiving and many blessings and prosperity. Good luck to us all : )

    Sentiment: Strong Buy

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    • Xion,

      I wish you all the best with this trade and hope our beloved exceeds $33 for all of our sakes.

      One question, how are you addressing your tax liabilities?

      GL2UA and go AGNC.


    • Will be pulling for you- $33 should be achievable

    • Wow. Happy Thanksgiving!

      Here's to even happier Christmas! I'll be pulling for $33.

    • Happy Thanksgiving, all and best of luck to you, xion and fellow longs on this div run.
      I'm looking forward to reading your book when all's done.

      Xion, I wouldn't want to say anything to throw you off your game (hey, to me, it's a profitable looking trade) am just curious about your choice of months though. If you don't mind my asking, why the Decembers instead of Jan?

      In terms of risk and unlikely worst case scenarios ... suppose there's no run-up in December and AGNC stock is still here at @ 31.42 a day before exdiv. Then looking at 'fair values' ...

      DEC 31 calls would be worth $.45 for a 59% loss
      JAN 31 calls would be worth $1.12 for a 8.2% loss

      Granted, you can buy a little more DEC 31s versus JAN 31s (10.9% more). Gains for both are about the same, JAN 31s = 83.6% gain versus 81.8% for DECs

      DEC 31s
      29 days to exp (as of tNOV 22) agnc DEC 31 strike calls are worth $1.10 when pps @ 31.42 (iv @ 25.33)
      1 day to exp (as of NOV 22) agnc DEC 31 strike calls are worth $2.00 when pps @ 33.00 (iv @ 25.33)
      = 81.8% gain

      JAN 31s

      57 days to exp (as of NOV 22) agnc JAN 31 strike calls are worth $1.22 when pps @ 31.42 (iv @ 26.17)
      27 days to exp (as of NOV 22) agnc JAN 31 strike calls are worth $2.24 when pps @ 33 (iv @ 26.17)
      = 83.6% gain

      Just curious ... not trying to bother the pitcher who's throwing a no-hitter in the 8th inning ... I have a mere 200 Jan 32s @ .80 avg purchase price and hoping for a decent run-up. I'll go back to selling my peanuts now.

      Good luck,
      Cheers :D

      • 2 Replies to only_one_cannoli
      • Hi Only,

        I think Dec is the better play for what X desires which is greater leverage. Secondly, AGNC has been moving their EX dates forward, meaning that , I believe, the EX will be @ the Dec OPEX or one to two trading days earlier, so the run should be over , or close, by Dec OPEX.

        You left out a very important component in your cf of the Dec to the Jan contracts. The # of contracts X can purchase given a limited amount of money(in this case almost 500k). Watch:

        When X bought the Dec 31s ,trading for 1.00 avg, the Jan 31s were trading for 1.14. Lets say he had 400k for that trade. He would be able to get 4,000 contracts(ignoring commission) in Dec and 3,508 contracts of the Jan.

        PPS goes to 33.00 @ EX and the pot doubles on the Decs for 400k profit and there is still .20 bid left on the Jans(2.20 bid) which gives you 2.20 x 3508 or 372k profit.(28k difference). (I got these values looking back @ Oct 2012 OPEX which was 33.00 PPS close, and used the 31.00 Strikes for Oct and Nov as proxy).

        Furthermore suppose we go to 34+(my thought) and the EX is B4 the OPEX(my thought), and X is still holding. Then the difference between the Jan contract and the Dec contract is only 7 cents(bid). Now he makes( at 34), 792,000 profit , whereas the Jan makes 669,940 profit , or a 122,060 difference.

        The benefit, of course of the Jan over the Dec is if we don't make BE(32) by Dec OPEX or EX.



      • The reason I picked December calls is the same reason why people buy tons of cheap beer...more bang for the buck and increased volatility. On the downside, I know it's more risky and the time on those calls is running out. I do not recommend that others do what I did, for their own safety. I guess another reason I did it is because I have been poor all of my life, I don't want to be poor anymore.

        Sentiment: Strong Buy

    • Thanks for the following up trade just like you promised, I'm sure we will hit $33, seems conservative enough, but one question- when the fiscal deal is worked out don't you think this could rise a buck or two above $33? or will you still be selling all your calls at $33 no matter what?

      Sentiment: Strong Buy

    • bowhunterron Nov 23, 2012 2:23 PM Flag

      X your a man of your word, and here we go again with another AGNC divy run. I wish the very best for you and all others playing the divy run. I'm in it with you with Jan 31s @$1.03, but with a whole lot smaller position. I sincerely hope you make that million this time around, and hope you will be able to stop betting it all after your successful quest. The best of luck to you and all longs.

    • I think you'll make your first million Xion.

      I'll be joining you soon. I'm not buying this optimism. I think Obama has nothing to lose by playing hardball and if the Rep. cave in, they're not getting elected in 2014. I just bought a bunch of FB puts.

      So we might see 30.15, and I have GTC orders set. We still have 3 weeks to div announcement. 33 is coming if div is cut to 1, if div is maintained, then 35 baby. :)

      • 2 Replies to olee2116
      • I believe that one side, either Obama or the GOP will offer to delay the fiscal cliff by extending the date, say for 6 months or the like, if they cannot come up to a compromise in time. If the offer to extend the date gets turned down by one of the two sides then the perception will be that the side who turned it down is completely unwilling to compromise and they will be perceived as the bad guys and I will agree with them whether it is Obama or the GOP. Refusing a date extension would be an excessive tactic and uncalled for, and indicates a reckless disregard for the economy in my opinion.

        We need to move out of this situation gradually to keep from creating economic ripples, I think everyone realizes that. And anyone who is willing to tank the economy out of stubbornness is going too far.

      • Thanks Olee, I'm hoping to make that million too. I wish you the best too.

        Sentiment: Strong Buy

    • I wish you nothing but the best,hope you make a killing.
      I made a mil+ in a similar way with GS... one caveat, the Tax man

    • Don't forget to say your Hail Mary's and Our Father's.....

    • Xion - I'm feeling your pain .. Just not as bad .. I bought the March 31's .. @ 1.50 Why would anyone risk that much on such a short time period .. I'm also thinking of buying the Jan 2014 32's calls .. & still keeping most of the powder dry .. for better times to get in .. I'm hoping your on target w/ those Dec 31 calls .. Rich

      Sentiment: Strong Buy

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