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American Capital Agency Corp. Message Board

  • bjamin@btinternet.com bjamin Nov 29, 2012 4:13 PM Flag

    Q4 Dividend is a 2012 event

    For those interested, investor relations just sent me the following:

    "Typically the Q4 dividend is declared in December (and has an ex and record date in December), but it's paid in January. It would still be considered a 2012 tax event, though, as the record date is typically in December. For cash flow reasons, the payment date is typically the following month, after we receive principal and interest payments on our securities."

    Sentiment: Strong Buy

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    • I own Dec 2012 calls and now fear that if the ex Div is before the calls expire (Dec. 22), the calls will decrease drastically after the ex Div date and the calls will be restrained from rising by the impending Ex Date even before it occurrs.. So, would it not make a lot more sense to own the Jan 2013 calls???

      Sentiment: Hold

      • 2 Replies to deandeharpporte
      • Very simple answer for you. If you own the dec calls.. its simple.. The very latest you should sell is 1 day BEFORE EX DIVIDEND. So if the exdividend is dec 18 and calls expire on the 22nd.. obviously you dump all your calls on the 17th. Unless u want to own the stock anyways you can excercise the calls and hold the shares for the dividend. BUt keep in mind the stock falls by the dividend amount on the ex day anyways. + or - any day change.

      • I was considering the same thought a couple days ago. I think its important to remember that the option is exactly what it is. You are buying the right to purchase shares at a certain price. When they announce the date of the dividend, it doesn't matter which option you have, you can still take the shares at that price and hold them as long as you would like. Take the div if you want, or sell before, whatever. Worst case scenario for the Dec calls is if they announced the EX date to be dec 31st. You could still take the shares on the 22nd, and sit on them for a few days and sell high before EX, or hold through dividend. To me it doesn't really seem to matter, but I may be missing if something is already priced in based on what people are guessing on when the EX date will be.. before or after OPEX (22nd). That was my question, but I didn't get an answer.

 
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