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<p>I bought it at $2.85 and it is now around $3.25. It’s been yielding about 15 to 18 percent from dividends during that time. I have been thinking of selling covered calls to enhance yield but the premium is not too great. If interest rates start to go up, it will probably crash and I will be out before that time.</p>
<p>If I had tried to trade CIM during that time, I would have gotten destroyed.</p>
<p>Anyone have any thoughts on PFSW? I bought 10,000 at $2.30 and foolishly did not sell when it reached a high last year of close to $6. It is down in the mid 3’s and seems to be staying there.</p>
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<p>I am thinking we also need to change rewards/compensation structure. People who “makes” should be compensated more and managers/CEOs less. Workers used to get paid more than now. Coming up with inventions should be more highly compensated than closing a deal. IMO it’s more cultural than market force.</p>
<p>"I hope the short duration of the puts saves us from any major losses. Because of the size of your trades, you are probably ok… "</p>
<p>You can always roll them out - maybe forever. In the past I’ve had to roll out cat and intc 3 times but in the end had a profit. I’m more nervous with the market going up faster than my return selling puts. This would force me to sell less puts because of the higher price of the stock and reduce my returns. I prefer the market going down (but not too fast). I’m never too worried with spy and iwm - they’re not going out of business anytime soon.</p>
<p>I owned nly for about a year a little while ago and did pretty well. I’m not sure that I understand all of the intricacies of their business model, but it is basically a leveraged borrow short-lend long approach. So the basic issue is not absolute interest rates, but rather the spread; they get killed in particular if you have an inverted yield curve.</p>
<p>Over time, most of the gains have come from the high dividends–often over 10%. given that reality,it seems to me that if you dollar cost average into the stock over a long period of time, you should make money unless the whole enterprise collapses.</p>
<p>Doct, I prefer the same…</p>
<p>I have found there are times when rolling doesn’t work. These times are rare but they do happen.</p>
<p>Right before the financial meltdown, aig did a secondary. Sold stock at a discount to where it was trading. I figured aig would hold the secondary price. I think the secondary was around 38 so I sold the 35 puts for a buck. Well…I lost 17 bucks and 32 bucks as the stock crashed. Yes…I should have used stops. I thought it was going to be a long term hold. Aig was supposed to be a triple a rated company.</p>
<p>I also sold puts in enron…covered those for a loss. </p>
<p>The large indexes are easier to roll.</p>
<p>Razorsharp, you have a nice entry point. There doesn’t look like there is much interest in the options.</p>
<p>Harvestmoon, never heard of that stock.
Igloo, good luck with that. I agree with you…</p>
<p>How does nly mark its assets? What is the duration of those assets?</p>
<p>If rates rise, the value of nly’s mortgages shrinks. Because of leverage, that decrease in value can be huge…</p>
<p>Just recalculated NLY since we were discussing it. Current price is around 16. I paid around 18 for my shares but with dividends received my adjusted cost is now around 14.50, so I am ahead but haven’t calculated the annualized return.</p>
<p>It seems to me that we have two different issues here. If I understand you correctly, you are are noting that the value of the assets–the mortgages held–will fall if interest rates rise, and that that phenomenon is likely to drive down the stock price. But if you are looking at nly primarily as a long term income play, I think that point is less critical.</p>
<p>EMM1, I think you are wrong…</p>
<p>[Investor</a> Alert - Duration?What an Interest Rate Hike Could Do to Your Bond Portfolio - FINRA](<a href=“http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/Bonds/P204318]Investor”>http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/Bonds/P204318)</p>
<p><a href=“http://observationsandnotes.blogspot.com/2010/10/bond-duration.html[/url]”>http://observationsandnotes.blogspot.com/2010/10/bond-duration.html</a></p>
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<p>That’s an interesting company in that they seem to be able to generate a lot of revenue in the web commerce space. Their main problem though, is generating profits. I just looked at income statements for three years and they are kind of bleh. If you follow the company closely and expect profitability in the near future, then it might be worth holding. It’s not interesting enough to me to dig into this company.</p>
<p>The chart is so-so. The recent rise is still below Fibonacci retracement levels that are interesting though the 50/200 cross is short-term bullish. The most curious thing about this stock is the volume. Yesterday it traded about 4,000 shares. In general, I prefer stocks that trade at least 500,000 shares a day outside of special situations. I would not have had the patience that you showed with this stock and would have had a trailing stop or some kind of technical signal to preserve profits.</p>
<p>It looks like it could be somewhat challenging getting out of this position if you have a lot of shares.</p>
<p>“I also sold puts in enron…covered those for a loss.”</p>
<p>That’s why most of my put selling is with spy and iwm - they’re not enron or aig. Individual companies obviously have much more risk. I try to work in the zone where my chance of losing is < 15% so the odds are heavily in my favor (even though the probabilities can be meaningless as anything can happen). Even at that its less risky than buying the stock. It is the same with a casino which hold only a slight advantage over the patrons but consistently make money even though once in a while they lose big.</p>
<p>Yeah…</p>
<p>I sold puts in enron because there was a takeover bid and usually stocks with takeover bids don’t plummet…</p>
<p>When the stock started dropping I got out…when stocks don’t behave the way they should I get out…</p>
<p>I still had a bad loss in enron. I was short a lot of puts there.
I buried my ex boss for over $100,000. I told him the idea. I told him I closed the position at a loss. What else could I do?</p>
<p>I traded the way gamblers trade… The better the odds, the bigger the position…
And I folded the hand when the stock acted in a bizarre manner.</p>
<p>Should have been following Doug Noland’s column. He questioned their accounting in January when their stock was at its highs and bought puts on the way down.</p>
<p>I guess so…</p>
<p>I guess after that 100k loss was when your boss became your ex boss? I found out recently that a friend that I had who was a broker had written a book on trading options. Apparently he did this put selling stuff in a very risky way (I don’t really know what he did - I heard this second hand), lost his clients’ money and was barred from the securities industry. I haven’t been in touch with him for 20 years but he’s successful in another business adventure.</p>
<p>Doct, interesting story. I like it. </p>
<p>As far as the ex boss goes…he was the boss of the hft company. </p>
<p>This was outside that. This was years ago…
So nah…</p>
<p>So doct, what are the chances nke is below 55 by April expiration?</p>
<p>For the 4/20, probability = 14%</p>
<p>What volatility did u use?</p>
<p>Is that the implied vol?</p>