Agree, Ray. I addd to NTI and CVRR last week, as well as CLMT. Let's hope the uptrend continues, as it certainly heps to have that going in our favor while we watch the REITS crumble under the weight of QE worry.
There were a few earlier threads about what happens with existing NCT options. Here is an extract from a memo posted on the CBOE website (under Contract Adjustments) on May 3. In a nutshell, the earlier suggestions that prices would adjust or the options would split between NCT and NRZ were incorrect; instead, a pre-split NCT option for 100 shares becomes a post split option for 100 shares of NCT plus 100 shares of NRZ. So the combined value of both compared to the strike price is what will drive exercises.
I hope this helps clarify the situation for those holding or considering options. I'm sitting on a pile of them myself. GLTA.
Pursuant to Article VI, Section 11 and 11A of OCC's By-Laws, all NCT options outstanding as of
Thursday, May 16, 2013, shall be adjusted to require the per-contract delivery or receipt of the
following: (A) 100 shares of Newcastle Investment Corp. ("NCT") Common Stock; plus (B) 100
shares of (New) New Residential Investment Corp. Common Stock. The NCT option symbol will
change to NCT1. Premiums and strike-price amounts for the adjusted NCT1 options will continue to
be calculated on the basis of a multiplier of 100, i.e., for premium and strike-price extensions, 1.00
will equal $100. Strike prices will remain the same.
I just took a look at the proxy statement (released this afternoon) for the NCT shareholder meeting to be held in June. On page 28 is this nugget in the text related to requesting an increase in authorized share count from 600 million to 1.1 billion:
"In addition, we expect our stock price to experience a downward adjustment following the proposed spin-off of our subsidiary New Residential Investment Corp., which is expected to occur in the first half of 2013."
I don't think this indicates anything is wrong with the spinoff, but it does call into question the likelihood of this transaction happening by the date of the earnings release and conference call (although of course those are certainly going to be "in the first half of 2013"). Not sure how the market is going to react to this tomorrow....if at all. Any opinions?
Ray - someone posted the draft text of the S-11, and it indicates they are focusing these funds (yet to be raised) on Agency MBS. Take a look at the topic that starts "S-11..."
Thanks for the followup and additional suggestion. It seems your information re: premarket trading on Ex-div date was accurate (although somewhat dependent on premarket buyers not behaving logically and dropping their bid price), and I understand the limit order suggestion you make here as well. As for WMC, my suggesiton to hold off was predicated on an expected SPO, and that surely has not happened so any illusion of accuracy with respect to my advice is purely coincidental!
Indeed, this has been a most valuable exchange, Robin. I think you may have just bumped my future returns by a sizeable percentage! Thanks!
Thanks for the detailed response. I know how it works with respect to normal market hours (agree with your summary, BTW). Your pre-market info is new for me, though, and I will certainly do a bit of checking to confirm the info you've provided. It seems strange that the pre-market price on Ex-div day does not already reflect the dividend being deducted, but since you are positive then that is worth spending some time looking into. To be able to collect the divvy and sell for pre-Ex div price would change my approach for sure.
Robin - My broker doesn't allow access to pre-market (maybe I need a new broker!), so I can't do what you describe. Consequently, I choose not to risk a greater drop than the amount of the divvy and sell on Ex-1. Plus, if there is to be an SPO it sometimes follows the Ex date closely, so I can buy back in after both the divvy reduction and the SPO drop. I might mention that I only sell the shares and pass on the dividend if the PPS has gained more than the divvy amount since I last purchased AGNC. Otherwise I wil hold through and collect the divvy.
I'm amazed you can get both the dividend AND sell before the price drops by the divvy in pre-market!! Are you positive about that? If yes, why wouldn't EVERYONE do it? For that, I WILL switch brokers!
Lastly, if NTI doesn't reach 30 but is anywhere between $23.50 (okay, $23.91; it cost me $0.41 to hedge) and $30 by OPEX, I still make money if I hold the options until expiry. Odds are, though, that I cover or roll out to a later month before that happens. Usually that is the case, anyway.
I like both AGNC and NTI long term. I mostly trade options on them, although I do buy AGNC shares after SPO or "crash" but then tend to sell the day before Ex-div. Regarding NTI, today I sold Sep30 Puts for $6.51/contract; net exercise $23.49 if assigned. That is basically where the PPS was after their SPO a couple months ago, and it hasn't been that low since. I'm hedged with long Jun17.50 puts in case of a disaster in the next 60 days. Good luck to you!
I agree with Bob on the quality of the ranking, but in addition there would seem to be a significant risk of an SPO possibly as early as tomorrow. WMC is new, small and has had only one SPO and that was 6 months ago. They need to grow and SPO is the only way they can. I'm holding off reentry until then.
Exited half my 22.28s at $1.60 as well today, but was lucky enough to have picked them up on the dip last Friday at $1.00. 60% gain for a one business day hold - best trade for me all year! Also sold another quarter of my 19.78s at $4.10; acquired March 1 for $2.08. Today has been a good day so far... let's hope it holds and we can all celebrate.
Been swamped the past month with work, so haven't had time to fully digest the trading regimen. So, have not followd the protocol, but intend to (things will be slowing down for me now) starting April 1..
Foxy - see Jtrader's correction to my post. We need to add this quarter's earnings (presently unknown, but likely at least $0.90) and, in addition, the accretive value of the recent SPO. In addition, there will have been some change in the FMV of their holdings. So, BV probably way higher than the number you calculated and therefore stock is not trading significantly above BV. I do agree that risk of SPO here is pretty low, but given that I am long I am hoping your flash crash order doesn't fill (sorry!).
The press release says date of record is March 28, so Ex date is March 26.
NEW YORK, March 18, 2013 (GLOBE NEWSWIRE) -- New York Mortgage Trust, Inc. (Nasdaq:NYMT) (the "Company") announced today that its Board of Directors declared a regular quarterly cash dividend of $0.27 per share on shares of its common stock for the quarter ending March 31, 2013. The dividend will be payable on April 25, 2013 to common stockholders of record as of March 28, 2013.
Ah, my bad! I was thinking that the BV was the Q1 BV, but of course the earnings and dividend announcements that occurred in Q1 were as of (or based on) Q4. I stand corrected and appreciate the lesson. Glad that those hwho bought did get a good buy after all....