I'm a big fan of AGNC, but I bought in at $27.04, plus two dividends, and I can't imagine this stock going much higher than it is right now. I had to take my profits. I'll probably buy back in soon.
I have been thinking of myself as still a newcomer to this board but I guess I am becoming an old-timer... Not as much as others here, of course, but gosh, we've been through quite a bit together already.
Speaking of old-timers, I see that a number of the familiar names have been missing for a while.
I also see a lot of new people continuously opining that AGNC needs the SPOs to keep its business going, and other similar things. I see now that it can get tiring to be an old-timer and keep discussing the same points over and over. Maybe that's the reason so many have disappeared?
Ephort and Doc,
That is the discussion I was looking for. Reading the article now and it addresses my hypothesis perfectly.
A guy has to figure that when it comes to working the system for a little gain, some human being has already worked it before...or at least thought about it.
I have been chiming in here since December adn the education has been great, also my sudoku playing has fallen off a cliff.
I hope word does not get out too much on how easy it is to play the mREIT games, because then option prices will rise and bake the profits.
Doc, My 1% [of 2012 gain] donation to GFA is growing.
Ephort is right Slegermark,
I was one of the first on this board a year or so ago(seems more "so" the older I get), that brought the board's attention to the MM's hat trick:
There is a rare chance your strategy will work. Like buying a lotto ticket. I have seen many try over the past three years here. You will be the first I will hear with positive results.
I do wish you well. I think it is great you are thinking about these different ways to use options. I have spent thousands of hours doing the same. I think it is much better than Sudoku...;-)
I also know the reality, as I'm sure that you do also, but it's still a challenge and great fun to try. Ephort has watched me (and graciously brought my attention to) enter some no win spreads, where I just knew I had the MM, only to find out that anyplace the PPS ended up I was neutral...no win...thanks Ephort...love you...;-)
Hey, Ephort, remember that Bear Put Combo last year or so, when I went Long the Sept 35Puts and went Long the 27Puts and shorted the 28's in a 1/7/6 combination? Crazy stuff...Sudoku...;-)
slegermark, are you aware of the MM dividend capture game the day before ex-div?
I'm not sure how long you have been following this board, but that's one of the essentials if you want to play with AGNC options.
Long story short, the probability of holding ITM calls through ex-div is pretty low.
No. Who ever buys them from me would have to exercise early or they would be worthless at opex.
If the buyers are relying on a program or their brokers, they might miss the exercise because they are going by convention at opex not realising the shares lose value as soon as the stock goes xdiv ten days before opex.
I am saying this might be an opportunity to get a good bump.
Selling 32's when pps is at 33 would get over a buck but drop out of the money on xdiv. Now you get to keep your shares and the divy and the call income for 2.50.
I will just test it out on a couple contracts and get back to you. Either way it is not a bad outcome.
>>On selling 33calls or even 32's;.....Now we are down to 30.5 with ten days to opex. They would have to be exercised before xdiv because they will never be in the money at opex. >>
If you are short, you can't "exercise"...just let them expire or buy them back.
On selling 33calls or even 32's;
Say xdiv is ten days before opex.
pps shoots up to 33.xx
then on xdiv it drops and then spo. Now we are down to 30.5 with ten days to opex. They would have to be exercised before xdiv because they will never be in the money at opex.
Yes, this price run-up is a mixed blessing for me, I got into AGNC pretty much for the dividends, not to trade. But it sure is getting pricey.
The option traders on this board will probably suggest just the trade to make for those of us who would prefer to hold and collect dividends but take advantage of the price and protect against a steep drop. I'd guess, write a covered call, use the proceeds to buy a put, the trick being the right strike prices and dates.
And if AGNC keeps climbing, your stock could get called away and your put is worthless.
I'm in it for the dividend. The price appreciation is unexpected but wonderful. The few covered calls I sold last year I bought back at a loss. I'm glad I stopped writing calls and avoiding puts and I'm miles ahead by just collecting dividends and buying more AGNC with any spare cash I have.
Very nice, no one ever frowns on someone who take profits, and if they do well they are not a true trader.
But I would also like to add my 2 cents if I could. The Facebook IPO is set to be priced and released next Thursday and the Market will rally on this event.
What does this have to do with AGNC? nothing of course, except a nice Market rally and push through $33.
Again congratulation on you win...+100