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American Capital Mortgage Investment Corp. Message Board

  • ben9471 ben9471 Jun 15, 2012 1:44 PM Flag

    The June 16 22.50s (volume and open interest)

    This is my therory on part of why the shares are underperforming.

    We dropped $.10 from $23.90 to $23.80 from Wednesday to Thursday; then another $.10 from $23.80 to $23.70 today. Looks like part of the culprit is the volume and open interest on June 22.50's. So, if someone bought them today for $1.15 with a strike of $22.50. the basis is $23.65. If they then turn around and sell them for $23.70, they make $.05. On 1,104 contracts today, that is 110,500 x .05 or $5,525. There is also another 2,124 contracts in open interest expiring today. So, that adds another 212,400 shares for .05 or $10,620. I know it sounds like pittance, but until they can burn through the volume and open interest on the 22.50's, there is little hope we will see something above $23.70. Tough way to make money, but obviously a good way to trade when you have the resources. Please shoot holes in this theory if you want. I am glad I am out for now. I also think there is an overhang of shares from the spo, but there may will be a pop on Monday.

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    • Ben, Your hypohesis sounds right, but then I frequently think only what I am told to think.

      I was thinking all day that the june 22.5's were holding the price down. I sold almost half of my July22.5 early for 1.30 this morning then decided screw em. I will exercise piecemeal until I am through. Then I thought we will see a small pop on monday, maybe even a large one. So I was waiting for a day's end lift to confirm. Now if Greece does not cause havoc..., or if it does...

      I expect an immediate spo as well. My september and december itm's can wait.

17.12-0.13(-0.75%)1:13 PMEDT