Check out the weekly chart if you are into technicals: AGNC just convincingly broke it's 200 day MA. If it can stay above the 200MA, coupled with the inverse Head & Shoulders pattern going back to last October, it "should" carry the PPS to 35 since it also just broke the H&S neckline.
Personally, I prefer stocks AND one month options, but that's my trading personality. I've been trading for 11 years. Started in stocks only, then thought I knew everything and got into really short term options and lost half my accumulated capital in six months. Bad deal. Went back to stocks and it was a roller coaster of winning and losing due mainly to lack of personal discipline and making the same mistakes repeatedly. Took a six month break, seriously re-evaluated and made two BIG discoveries: 1.) if you own a well managed, hi-dividend stock, it really doesn't matter what the price does. Every dividend dividend pay out reduces your cost basis and also provides income. 2.) selling calls and cash covered puts, sometimes with multiple trades in one month, positions you as "the house' with the best advantage of success in the trade.
I've been following this strategy for the last two years with a targeted annual return of 30% - my two year average is 27% ( it could have been up around 33% but I find I still make some mistakes and still need outside feedback). Some options people would say 27% is lousy, but at that percentge my money doubles every 3 years (rule of 72). Not exciting and sometimes outright boring, but it's working, it's paying off the loans that accumulated from my kids going to college, and also building retirement accounts for me and my wife. And worst case, like now when I missed taking action on the sell signal on AGNC in October and am 100% long, the dividend will get the trade profitable again over time. And I know I will be able to make at least the return percentage of the dividend of 15% and then some, since I will be able to sell options to increase the percentage as soon as the dividend cash is deposited into my account. Your mileage may vary, but it has been working for me.
During the last calendar year I've noticed AGNC has been moving their dates forward about 10 days. So, based on that would say Dec 19-21 for X-Div.
If you are into technical analysis, go out to a daily line chart of AGNC, put in a six month timeframe. look at the developing pattern. It's exactly half of an inverted head and shoulders. So, IF AGNC breaks up above it's negative trend line at approx 31.80, and IF it forms the other shoulder at the resistance neckline of approx. 33, there is a POSSIBILITY of 37+. So, conservatively,I would take profits at 31.80-32, buy back in on the pullback; take profits at the 33 H&S neckline, buy back in after settlement and ride it up until the price breaks over on a reaction to the H&S pattern IF it develops. All this is a big IF and is making the assumption that AGNC has bottomed, Gary kain will keep the bottom with the buyback program, and the herd feels positive about AGNC - but it's something to look for. Just my two cents....
Go out to the Options Industry Council home page, then the Tools and Resources tab - they have three options calculators and a covered call calculator (I tried to just send the URL and make it easy but the board stripped it)
The problem is even the anchors at CNBC, in their post press conference discussion, said they didn't hear any conciliatory tone in his press conference. His comment about the people knowing what they were going to get when they elected him didn't help. Along with his increased amount of demanded tax revenues of 1.6 Billion, I'm not too optimistic about an agreement any time soon. I am tending towards Doc's analysis that the fiscal cliff issue will be with us right up until midnight Dec 31st., and maybe won't get resolved even then. Obama has nothing to lose. now. It appears he's doubling down, hard lining issues and is going to teach the republicans a lesson.
REIT Fears Overblown; Buy American Capital Agency (AGNC) on Weakness
10:56 AM ET, 11/14/2012 - Street Insider
American Capital Agency (NASDAQ: AGNC ) shares were under pressure on Tuesday on a number of concerns, including regulatory and legislative risks, noted a report by analysts at Nomura. In the view of analysts, these concerns are largely overblown.
One of concerns raised by investors comes in the form of the proposed Menendez-Boxer Bill, which some say would further liberalize the HARP Program.
"While investors are justifiably concerned that passage of this bill would increase prepayment risk, our Washington sources suggest that the bill is unlikely to receive enough support to make it through the Senate. Even if it did, the watered-down version is unlikely to make it through the Republican-controlled House," said analyst Bill Carcache.
Press reports also suggest Edward DeMarco could be replaced as the head of the FHFA.
"If this happens (which our Washington sources suggest is unlikely), the consensus view is likely that principal forgiveness will be back on the table, and prepayment speeds will rise significantly," said Carache. "What many investors don t realize is that principal forgiveness is a form of modification. Agency mortgage REITs have already experienced the prepayments associated with principal forgiveness."
Nomura Securities maintained a Buy rating on American Capital Agency (NASDAQ: AGNC) with a price target of $36.50.
For an analyst ratings summary and ratings history on American Capital Agency click here. For more ratings news on American Capital Agency click here.
Shares of American Capital Agency closed at $29.58 yesterday, with a 52 week range of $27.61-$36.77.
Agreed. I have read over a bunch of the posts on what might happen with the dividend payout, and even if it drops in 2013 to 10% (which I think is unlikely based on what AGNC management has said so far) I'll be able to recoup the losses and possibly make some money next year. It's just frustrating, especially when going over things and analyzing what I could have done better. For instance: I see where I could have taken about a one dollar per share loss at the break through support on the price, then gotten back in at a lower price with a cash secured put and I would be looking OK right now. Frustrating. Educational, but frustrating.
Thanks for the input. TA has served me pretty well the last 10 years (along with a modicum of fundamental analysis), but I missed the trend reversal by being too optimistic based on past TA performance - so you have a point. I've got the patience and discipline to work out of the position and I'm tending towards collecting the divvy to start lowering my cost basis then moving forward. After the dividend my cost basis will be more workable and I can start looking at various option tactics. It just bothers the heck out of me to have "dead" money for several months.
Looking for feedback - Currently holding shares (all in, no cash reserve) just under $34.90 based on what I thought the technicals were doing. Blind sided by the sell off. Current plan is to either:
A.) Sell a Dec call above my cost basis on a run up to X-Div date and go to cash If I can get a call above my cost basis and equal to or more than the dividend amount, then sell a Jan call.
B.) Hold and collect the dividend then sell the Jan Call.
Thoughts? constructive comments?