Bought at the market price of $10.15 and then sold the same number of November $10 puts at $0.65 for a net price of 10.15-.65 = $9.50. If the puts are exercised, I will end up buying 1/2 of my current position at $10.00 for an average cost of $9.75. Either way I just bought below the already depressed market price of around $10.10. And while I wait, I get a yield north of 13%! Bam.
Why aren't you excited that this is on sale? Shouldn't you have done the exact opposite and bought more? Sell low, buy high? This is why the majority of "investors" can't beat the averages.
I think you didn't get the memo. Yes there is going to be a dividend decrease. Witness: News from Dow Jones on 10/31...
Rhino Resource Partners Sees FY Cash Available for Distribution $43M-$47M
Based on their shares outstanding of about 29 million, then dividend should be around 43/29 = $1.48.
Still about 15% based on current pricing, so I'm sort of scratching my head here as to why RNO is trading this low. Perhaps it's end of year tax loss selling.
Now I think it's time to buy, or at least begin to establish a position. I got in at around 16.45. I hope it goes even lower so that I can buy more.
And you think that changes the dividend of an mbs? By the way, that was rhetorical.
Correction -- Selling with a 22% yield right now. If the dividend is maintained, the return will likely be much higher than 22%
Plus for those chartists out there it just closed the gap that occurred about a week ago. We should be set for an uptrend now...
My theory is that they will maintain the dividend given that at the current price of about 17.50 all of the insider transactions are underwater. Furthermore, they have the cash to maintain the dividend and given they must pay out 95%, I don't see how a cut is in the cards. It's just that all the MREITs are selling off right now and so this is the buying opportunity of the lifetime in my opinion.
This fund is NOT yielding 12%, it is distributing 12%. The actual yield is just under 7% because the dividend the fund is earning is roughly 55% of the distribution. The fund manager is effectively handing you back part of your investment as a distribution and collecting a fee for it. Now I don't know about you, but when I make an income investment I always expect that investment to earn its distribution. This fund is not even close to meeting this fundamental requirement. Get informed.
This thing has been so overvalued for such a long period of time and PIMCO is part of the problem. Instead of distributing twice the dividend the fund is actually earning, PIMCO should be more realistic and distribute roughly the .07/share per month it is earning. Even at today's price that would be a yield of aproximately 7% which is still way overvalued for junk debt. Why are people so uninformed? This should be selling for under $8 / share. People think they are getting a dividend over 11% when in fact half of it is a return of capital. This is just so sad and the people at PIMCO are holding the dividend up out of their own self-interests to take advantage of the uninformed. And then there are those disingenuous people on this board that are attempting to justify the value of this fund because they own it. Shame on them. I hope they eventually get what they deserve.
Sentiment: Strong Sell
Look at the post again. In addition to selling the put I am buying an equal amount of the equity to participate in potential upside and dividends. The option premium lowers your average cost. It's basically a strategy that allows one to buy an equity at an average cost below the current market price whether or not the option gets exercised.
Scenario 1: Option not exercised.
Buy 1000 shares at 11.40
Sell 10 puts at $2.00
Total cost = 11400 - 2000 / 1000 = 9.40 /shr.
Scenario 2: Option exercised
Buy 1000 shares at 11.40
Sell 10 puts at $2.00
Options exercised so I have to buy 1000 more shares
Total cost = 11400 - 2000 + 12500 / 2000 = $10.95 /shr.
Of course this ignores commission, but you get the idea...
Yes, really. Slight problem with book value, however. Nevertheless it amazes me how there is disappointment with the stock's decline. If one thinks this is a good investment, particularly after such a report, one should be ecstatic and buy more. Get it?
Agreed. Book Value is $5.44, and I would not be surprised to see a SPO at around $5.50. A lot of SPOs have been hitting the market recently and it appears the timing is right with the lower volatility. I would not be surprised to see RSO drop into the $5.40 - 5.50 range...