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Resource Capital Corp. Message Board

  • j_owley j_owley Jan 20, 2011 8:34 PM Flag

    RSO options

    I was looking at a 2 week chart and realized, as I mentioned on another thread, we have had around a 10% drop in share price. It seems to be the ussual drop between dividend times and it seems this would be a great time for some calls. So I bought some August calls.

    I noticed one of our former posters feels we will be back to around mid $7's very soon.

    Anyone else think that options should be a good play here baring any un-wanted negative news?

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    • will look into on friday

    • I've looked at options on a number of REITS I own and I haven't done anything. It's a different kind of investing. It can be wildly speculative or rather conservative depending on how you play it. I'm not looking for even more speculation, just holding RSO with its huge divident is enough on that score.

      Here's a farily conservative strategy that is tempting for me. The Feb 7 call option strike price of 7.50 traded at .14 today actually up $.04.

      If you sell this out of the money option against shares you own, it's a no lose situation. You just make money. The only downside is you could possibly make less money, but you MAKR money no matter what. The option has less than 30 days to expire and if you got .14 for it, that's a 2% return in less than a month = annual rate of 24%!). If the stock reaches 7.50 in less than the 30 days, you make the .14 plus .65 on the stock or .79/6.85 = 11.5% in less than 30 days. The only regret you would have if the stock were to make it above 7.64 (7.50 + .14) and the way the market is behaving, it's dicey. Of course, RSO could have some great news with their earnings and the stock rises above 7.64. But you still made a hell of a return. Pretty tempting. I'm thinking about it with some of my shares.

12.39+0.19(+1.56%)Oct 21 4:02 PMEDT