the tnx was at today's level in august 2011 when agnc was trading 29. the fact that agnc is trading at 21 relative to this interest rate reflects how spooked investors have become. can anyone say "yield support"!? why is it the pundits are drooling over dow stocks with 4% yield, but a 20% yield is to be avoided!? the stock market is a strange place.
Oh my god i made a big mistake - filing for bankruptcy tomorrow - how could i have been soo stupid not to consult a genius of your caliber, knh, before making an investment decision. ...................... Not
in the seeking alpha transcript of AGNC's recent presentation they mention that they would activate their stock repurchase program when the stock price fell below book value which it is now. buying ahead of the dividend distribution helps with the dividend by reducing the float - fewer shares to send dividend checks for, right?
Hope you have stock to cover those calls. I will sell July calls against my shares after the ex-date, the dividend is too rich to risk having my shares called away. I will roll to August then sit out Sept. - I think that's the way to play a high yield covered-call - sit on hands, or sell puts every third month.
it is dropping because the interest rate on ten year treasury notes is rising- see ^tnx - and it is perceived that agnc is rate sensitive. all real estate related investments are getting slammed, this is not specific to agnc
you maybe could improve the trade by buying the call deeper in time. buy the call out a few months and get the front month short puts to pay for it. after the front month expires you could have a free call. that makes the big money if the market goes your way.
i like it. it will be profitable anywhere above 26 at jun expiration. very much so if above 27. good luck.
The new round of currency limbo has exported foreign problems to the US. This is lowering prices on $ denominated commodities by strengthening the $.
understood. we should get some extrinsic value back in the april and may options now that they have no dividend hanging in the balance , no?
I am not aware that options on mREIT's have any different workings than options on any other dividend paying equity. Edify me.
The not quite fair smell is based on my impression that the adjusted close is the final trade of normal hours less the dividend. Is that not right?
The $1.25 downward adjustment to price is how the dividend system works. On the ex-dividend date the dividend is not technically owned by the company anymore and the adjustment is fair play and theoretically neutral. However, shorters are inhibited before an ex-date because they will owe the dividend on the shares they borrowed. On ex-date short-interest is not restrained by the dividend and a sell-off sometimes follows. On the other hand, some buyers hold-off buying until the ex-div nonsense is played out and step-in to support a stock. This usually takes about a week to settle out. So the dip can be a good buying opportunity that often returns the price above the pre-ex-div levels. I have seen some stocks actually gap-up on ex-dividend and keep going.
If we close at 33.01 or higher today you should count on it. The way you guage assignment risk is to compare the extrinsic value on the option to the dividend. All call options in all expirations on AGNC currently have no or negative extrinsic value so the chance of assignment is fairly high. There is a $15 exercise fee assessed on both parties of an assignment transaction but the normal commissions are not charged. So if you have sufficient shares then this is a neat way of closing your trade at lower cost.
On further research I reverse my opinion. Shares purchased AH today DO qualify for the dividend according to the wiki page. This does not jybe with my sense of fair play but you could put in a low-ball bid and see if someone bites.