Im watching my precious pennies dissipate into thin air here girls. I'm usually the guys who doesn't lose much and is the first to point and laugh when others get pansted - Now I'm the one with my pants on the floor bent over. I'm long AGNC, ARR, and NLY and am blood red across the board..trying to tell myself we wont make a permanent move lower like CIM did yrs back
herron, the options they gave you are a good idea.
If you are scared don,t invest ! In your case i would just HOLD HALF , sit on the divy for years and do calls with the other half for even more income.
Not much comfort were they? I am an options guy and will explain one "option" you have...sorry..;-)
Suppose you have 1000 shares of AGNC. That is the equivalent of 10 contracts in options. Divide your shares by 100 and follow along. That is the number of contracts you will need to balance your potential earnings. You can buy the 15Jan25Call options for 4.35/option or contract. So in this example I will assume 1000 shares or 10 contracts. Multiply the 4.35 x 100 shares/contract x 10 contracts and you get $4,350. That is the price of admission for this trade.
So, you sell your AGNC shares, you currently own and take your loss. Having placed the option trade you own 10 contracts of AGNC January 2015 25 Strike Call options. This position gives you the right to exercise your options and be Long, anytime up and through the close on the third Friday in Jan 2015, @ the price of 25.00/share. Keep in mind you paid 4.35/share for this right. Therefore your BE( break even) is 29.35/share.
You do not get to collect dividends with your Call options. You do get to collect dividends once you exercise those Call options, converting them into shares. So, suppose Congress become bedfellows, the debt ceiling crisis is avoided, AGNC has stellar earnings and Mother Teresa rises from the dead, and ....AGNC is at 35.00 this March , right before the EX date.
Well son, sell your Calls, which are now worth 10.00/contract. You net the difference between 10 and 4.35 or 5.65/contact x 100 x 10 contracts = $5,650 profit for a few months work. Or exercise your Calls @ 25.00/share for a cost of $25,000, and collect the dividend, from that net 29.35/share position, I mentioned above.
The danger here with options is if we trade sidewase all year. You miss collecting dividends. So this is just a way, IMO, to park your equivalent shares at about the current PPS, to avoid a hit , or continuing downhill trend, until March's EX date. Decide what to do then with the options. After all, you have until 2015, which is an incredible leverage of time to get an option so close to BE on the current PPS.
With all due respect, I think selling puts should also be a strategy to consider. For example, looking at your expiration in 2015, one could sell the 25 strikes for $4.35 right now. I'd say you could consider the 23 strikes as well for $3.40. I have made way more money over time selling vol than buying it. Just a thought.
Interesting perspective, I sincerely appreciate the insight. I'll have to pass on that particular "option", for better or worse. But it's nice hearing an option guys perspective - breath of fresh air. I'm holding long, as in several yrs long...but if the floor drops out I may have to eat a heinous loss. Hoping even if we trend lower from here, several years worth of Divy's will bring me back above water - even though I'll be paying tax on those divy's getting me there (this is my worst case scenario hope)
If you are looking for girls Gladys, you will have to visit your nearest cathouse for that. If that task is too hard for you, ask someone to explain the birds and the bees to you, or buy an anatomy book. As far as you laughing at others when they lose in their positions, I cannot help you there. That requires psychiatric help. Or, you need to go out and buy a new personality. Because the one you have currently seems defective. Do you have a Dollartree near you???
I feel sorry for all the ones who held on and going to stick it out. I wish you the best luck and hope everything comes back better. Agnc will go back to 35 PPS sometime next year. ARR won't see 6.50 again. May hang around the low 6's and high 5's.
Take this for what it is worth: a post on a MB but this is way I look at it
1/ the momentum of Mreits is clearly negative and it is hard to see a near term catalyst to see it turn.
2/ I believe this dark cloud will only clear when either earnings or dividends are released next quarter ( depending on the yield curve, fed moves, etc). This later in the quarter result coincides with the final debt ceiling deadline. One has to assume those idiots will wait to the 11th hour.
3/ things could get REALLY ugly in between then and now
So I am taking my losses and banking them for tax purposes. When AGNC goes below $28 I'll start paying attention again. Good luck whatever you end up doing.
If you're booking a loss remember the 'wash sale' rule and stay out for (I believe) 30 days before taking a position in the same securities. I had to do this a few years back from Nov to Dec and had some pro tax advice at the time.
For me, I'm long and staying - it's a stormy ride but I think a deal in DC will right the boat next week. The deal will be bad, probably more kicking-the-can down the road, but what we're seeing is irrational panic on thin holiday volume across the entire tape.
Treasury spreads for Q4 are wider than Q3 by a touch according to treasury.gov by about 0.05ish by my quick numbers and it's a crude approximation of real estate behavior. I expect a soft quarter, in general, and tepid trading environment until the quarterly.