I have been surveying the best bet for Long and Short options on AGNC. I am in a 50/50 quandary on whether EX will be before or after the 21st. That is huge regarding the Puts. Add 1.25 onto all of the ATM and higher strikes as the lowest premium that they will be at on the day before EX, if EX is prior to the 21st. So much for the 31's being zero if the PPS stays at 31.00 on the day before EX. They will be at least 1.25 on the bid.
IMO, then, there are no good gets on the short Puts at this time, if you are betting on a low ball estimate of BV(32.49) by the day before EX, and an early EX. There are great gets if the EX is late(after the 21st) and I have layered in heavily, betting on this possibility, but I may be wrong(50/50). I still think the 34/30 @ 3.50 is great if EX is post OPEX. We end up @ PPS of 32.50 on the day before EX and you take home 2.00.
I turned my attention to the Long Calls and surveyed where the money was going and the best risk/reward opportunities for the short and/or long run(time frame). I think the 13Jun29Calls are golden @ 2.50 or better(2.40 is the sweet spot). BE being 31.40-31.50, and all the way to late June to cash in. That is 1.00 dollar under current book with over 6 months to OPEX. Money in the bank...
Do you really want to be making bets 6 months out with all that’s going on? I can see the possibility of BATSSATE (buy at $26 – sell at $28). Right now I’m just sitting on my Jan shotgun approach ($29s, $30s, $31s, $32s & $33s ((yuck))). Good luck to the longs.
It is a bet and I am in favor of it(giving long odds) for the following reasons. This is one of the longest, if not "the" longest time frames that AGNC has been trading 1.00+ dollars under book. What are the odds that will continue for 6 months. That is number one.
Number two, look at the dividend tax horizon. Regular qualified dividends(15%) are going the way of the Dodo(extinct) which most likely will include a shift out of those stocks with qualified dividends, into stocks with whopping big dividends, whose dividends are already taxed as regular income, with consistent yield history(read AGNC).
Three, if we do indeed go over the cliff(looking more likely as the cliff approaches, with the Dodos which should go extinct managing the same---topic for a different thread), look back at history(such as the debt ceiling crisis with the S&P downgrade of our debt, Aug 5th, 2011)
PPS sunk, (same as recently with America's--but not Wall Street's-- hero getting re-elected). What happened a day later on Aug 8th, 2011, AGNC went from 29.82 high on Aug 5th to 26.35 low the next trading day(8th), only to rebound on the 9th to a 29.78 close. What a great opportunity. While the world was saying, "OH, NO!", the smart money made more money. That's because they knew they had a winner in AGNC.
So, as most here know, I rely heavily on history. I have seen the chorus of nay-Sayers come out repeatedly on every pull back or crises we have been through for my over three years on this forum, and it is very predictable. Weeds come up in my lawn every Spring and I get out my hose(Long Calls) and weed killer(Short Puts) and hose the hell out of them(run to EX) and they disappear until the next Spring. My lawn is healthy(AGNC) and it always returns to a beautiful green(34+). Yes, history is no guarantee of future events, but it sure has worked so far for AGNC.
And the weeds will poke out again(nay-Sayers), but I am right there with my spray bottle in hand...;-)
I guess I,m still learning, I just bought the Jan 29s for $2.50 on Thursday, I could have bought the June 29s for the same money and had all that additional time premium. Thanks for bringing it to my attention to look out further then I have been. Important lesson for me there.