AGNC/Kevin – $28 puts were super-aggressive as they never even hit $29! Jan $28 puts are now $6.80 and I guess you sold them for $5.10 so just a $1.70 loss at $21.29. I think I'd sell the 2016 $25 outs ($5.65) and that costs $1.15 on the roll so you net into those with a $3.95 credit and your worst case is owning AGNC for $21.05, which is better off than you were on the short Jan $28s and you don't take anything out of pocket. I do like AGNC but they won't do better than the market in a pullback, they could easily drop to $18 and THEN you may want to DD but I wouldn't rush it.
Not getting any big moves down but, as we expected, there are plenty of deep pockets who want to be able to print a strong Q1 in their brochures.
March 27th, 2014 at 12:15 pm
AGNC/Kevin – $28 puts were super-aggressive as they never even hit $29! Jan $28 puts are now $6.80 and I guess you sold them for $5.10 so just a $1.70 loss at $21.29. I think I'd sell the 2016 $25 outs ($5.65) and that costs $1.15 on the roll so you net into those with a $3.95 credit and your worst case is owning AGNC for $21.05, which is better off than you were on the short Jan $28s and you don't take anything out of pocket. I do like AGNC but they won't do better than the market in a pullback, they could easily drop to $18 and THEN you may want to DD but I wouldn't rush it.
Not getting any big moves down but, as we expected, there are plenty of deep pockets who want to be able to print a strong Q1 in their brochures.