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American Capital Agency Corp. Message Board

  • instantwinbutton instantwinbutton Feb 28, 2013 11:53 AM Flag

    Went short 170 31 march puts

    15 days out and plenty of money to be made. Buying cheaper then everyone else feels good too, if assigned.

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    • Bad idea for the following reasons:

      1)March Puts are priced for the EX date occurring after Mar OPEX. If that happens, those March Puts will be on Par with a PPS of 33.00. IOW, you have to reach 33.00 PPS to just BE. If we have early EX and PPS reaches only 32.00 byEX date you are 300% down with the Mar31's being @ .66

      I looked @ shorting Puts this AM and saw the MMs pricing them with a post OPEX EX and certainly saw March as not worth the risk.


      • 1 Reply to reits_r_us
      • Doc
        What about shorting the March 33's for $1.45? The pps by ex would have to be $31.55 or below to probably get exercised correct? Take .05 from the $1.45 you collect and go long the March $30 Puts to give yourself a floor and take another .05 and go long the $33 March Calls.
        If the pps stays the same you collect $1.35, better than the div. If we go to $34 by March ex you keep the premium and make out on the $33 long calls. If we have a flash crash you protect yourself and possibly make money on the $30 long puts. Thoughts?

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