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American Capital Agency Corp. Message Board

  • ben9471 ben9471 Jan 31, 2012 6:23 PM Flag

    OT - LINE

    I have posted below, but I have excited one-half of the calls I bought on the Line SPO. I did well, but still have another 60, Feb., 29's to go.

    I won't be messing around, primarily because of EVEP. I did well in January anyway, but I don't need a repeat, not that I consider LINE to be anywhere near the same as EVEP, just considering the volume, price stability and dividend yield (7%+), but I felt I had to take some off the table where I was up and make sure I adjust my expectations around my observations.

    Line is a late partier, but I am worn out watching it gain a $.10 or $.20 here or there, and it didn't close up today from the day before, and it was looking like a winner about 12:00 My obervation is that there are sellers exiting postitions and that is similiar to EVEP, albeit we are talking about a lot more volume and there have been buyers coming in. When the buyers come in, the sellers give it awhile and then over the top and 20,000 more shares sold. So, my concern is we have done well for those of us who were in early with the ITM calls (or at least that is what I was sporting) and I have seen Line go south from here. I remember once I waited an entire quarter and then for only one day I was up and I closed with an 9% gain about two days before ex. That was awhile ago, but I don't want anyone to say I didn't cover this risk.

    It is entirely possible that we could have an amazing last minute run, but I don't want to risk capital with Feb. calls. My estimate at the beginning of the week was a price of about $37.70 - $38, because line generally rises about $.70 in the last five trading sesssions before ex.

    If it does trade up and we have a good open tomorrow, expect the peak to hit $37.50 again as it did today in the first 30 minutes. I will be ready to push the button then, but I might take out another 15 calls and let the last 15 ride to the end. Muy concern is that the sellers are waiting to exit too.

    Good luck!

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    • Got out today when the price crossed above $37.50. I did okay, but it could have been much better without the SPO. Oh well, I bought too early. I'm glad that it sounds like some of you did very well on the SPO. I was doing damage control at that point.

      I'm back to all cash now and looking for my next victim, haha.

      I'm still looking at AGNC puts and the March 31's would put me in the money below $29.30. I'm thinking the lower spreads could mean poor earnings for other mReits and they could pull AGNC down along with them.

      But I don't like playing puts, so I may just hold for the next SPO in this sector or the MLP's. If nothing else, I will look to get into position for the dividend runs. I need to work on my patience.


    • i also bailed on my Feb 37 calls for a 28% gain. i was excited when it shot up this morning but got tired of watching LINE move sideways.

      i now am only down 20% for the year (lost 30% earlier on some AGNC puts when when i thought we were getting a SPO last month).

      this was only my second option play but i think i'm hooked. thanks to everyone on this board who helped me get back in the game with a win. i appreciate all the advice as i'm still very green.

    • Ben,

      I just bailed on LINE. Made 28% on my $34 Apr Calls. Got back a little of what I lost with EVEP. Sure wish I had those EPD Feb 45 calls I bought at $2.30. So it goes.

      Now lets see what AGNC has for us next week.

      GL2UA and go AGNC.


      • 3 Replies to rimboomer
      • I did fine, given the position I was in. You might remember that I was holding 30 calls before the SPO occured, so I was down on one-hald of the calls and made about the same as you did in the calls I bought after the SPO. Overall, I made money, but of course, it was a rescue trade and rescure I did with some decent profits. Now that EVEP is gone; Line is gone, I can start making some good money. Anyway, I think the verdict is that everyone did okay on Line, and some might get a little more tomorrow. Onward and upward! Now, we just need to get AGNC at the right level so we can make a run.

      • Hey Rim,

        I cut loose my remaining LINE contracts this morning as well. I was sitting on 209 contracts, and the price movement wasn't as strong as I had hoped, so I decided not to miss out on the "existing" profit (does EVEP ring a bell?). I took a little hit on my APRIL 34s (-1.1%), but was very happy with the performance of my FEB36s (+76%).

        All in all, a profitable morning.


      • still have one day to go, hoping to see it above $37.50 going into ex-divd

    • Ben, I'm with you. I just got out of my Feb 34 calls (bought on 13 Jan, after the SPO announcement) for a 51% gain. No reason to keep playing chicken for a few more (or less!) bucks. Thanks again for your continued vigilance (and your prudent risk management reminders).

    • Following the SPO (which cut a unnecessarily harsh $2 off the share price imo), I was thinking we'd only get to the mid 37's. I was encouraged this morning when we hit 37.50, but I don't blame you one bit for pulling money off the table at that point.

      I haven't sold any yet, but I share your concerns about the price action. I will be watching very closely tomorrow to see what happens. I think we've been damaged by both the SPO and some larger market issues, so we'll see. If gets too far above 37.50 (say 37.75), I will likely pull the trigger. Otherwise, I will let the price action determine my exit. Holding to Thursday is still a possibility for me, but its not likely. I've also looked at holding through XD, but that doesn't look promising either. I'd love to see a late rise, though.

      My best case scenario is finding an exit for LINE followed by an AGNC SPO at this point.


    • Hey Ben,

      Congrats on taking some profits in LINE. Tomorrow should be interesting. You just have to wonder if some of the newly minted shares from the offering are slowly being sold off, blunting LINE's forward progress. At least LINE's typical volume shouldn't create a situation like we experienced with EVEP last week (too thinly traded).


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