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American Capital Agency Corp. Message Board

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  • jtrader64 jtrader64 Jan 30, 2013 1:38 AM Flag

    KMP buying CPNO; Effect on Options in KMP?

    It is a stock deal for KMP. As for what it will do, it should drop the shares of KMP tomorrow but the MLPs have been so hot as of late nothing seems to be able to hold them down so we'll see how the deal is viewed.

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    • Hey JT,

      ""it should drop the shares of KMP tomorrow but the MLPs have been so hot as of late nothing seems to be able to hold them down""

      Go figure. KMP is too schizophrenic. Between yesterday and this AM I am out at BE. Ping Pong up 2.00, down 2.00. its a #$%$ shoot I don't want to be in at the present. Still holding a few EPD Puts. This, once again, is a reinforcing message regarding the huge hurdle the option buyer faces around EX dates.

      I will stay on the other side and continue to write options. Odds are way in the writer's favor.

      On a separate note, I am out @ 10.87 on FSC this AM for a .20 profit this run. I am probably premature and we can see .40 before EX. I will be short on the EX for the next leg and will hold for .20 again. I might short on the DBEX and pay the dividend, holding for .20 and getting paid. Hard to find one Q, since monthlies, where this has not paid. What do you think?

      I am developing the same scenario with PSEC. The dates line up, IMO, for a 2 to 4 day entry post EX, long, with an entry of .20 below the close on the DBEX as your indicator, holding for .40(on PPS above 10.50), and .20 hold (below PPS 10.00). Enter on the next up day's close. IOW, if the PPS continues to close lower than the previous close do not enter until the next up day's close.

      This, of course does not work 100% of the time, but it is the "best fit" method to reap pretty incredible returns that I have found, rivaling and exceeding FSC's historicals. Check it out and good luck!!

      DocReits

      • 3 Replies to reits_r_us
      • Doc -

        Good call on the FSC play. I'm still in seeing if we can crack .90 here.

        Nice play on ARR, too. You are carving up these monthly payors. You'll have to start posting with a new MB alias, DocMonthly.

        Doc wrote (on FSC): "I might short on the DBEX and pay the dividend, holding for .20 and getting paid. Hard to find one Q, since monthlies, where this has not paid."

        Thus, you'd net a 10 cent gain after paying the dividend. I took a brief look (I'll look in more detail later), but some months offer a good chunk more and as long as you cover within the first three days (meaning ex plus the next two days), you should be safe so play for more than the 20 cents say 30 or 35 cents then if not hit after two days, lower the target to 20 cents but exit by the end of the third day. As I said, I'll have to review it a bit closer.

        I trade PSEC, too and I'll review your idea for that one, too.

        Thanks.

      • I played ARR the same and am out today with a .20 cent gain. Will look to re-enter post EX for another .20. ARR plays well for entry on the third day post EX. Sometimes you're caught with their frequent secondaries, but it still makes more than buy and hold(.20 cent hold, which is 2.5x dividend of .08 now), you just need to double down on their secondaries.

        DocReits

      • Just curious__if you have tried charting a support and resistance price envelope bands around those date centric pattern trades__to maybe fine tune your entry exit area.

    • Thanks, jtrader. Logical to think PPS drops, at least for some period at the open tomorrow. As long as it is far enough, and long enough, to trip my sell limits it'll be good enough for me.

 
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