Great video professor! Would like to ask you two questions: 1. Do you actually have to own the underlying to sell calls? 2. As you mentioned at min 6:52, if you see the price drifting up you would adjust your bands and move your puts and calls up. I am wondering if you will open these new positions after your previous puts-calls expire or you can actually close/modify your previous positions before expirations? Thank you for your time.
Hello, What are your thoughts on Annaly (NLY)? Looks like a similar business compared to AGNC. NLY has 93% assets backed by agencies whereas AGNC obviously has 100% backed by agencies. I believe if NLY was going to report earnings soon, then they probably would have cut their dividends. But they just reported their earnings and paid out a quarterly dividend as well. If the economy starts to open up, I can't see a very likely scenario where they end up cutting their dividends. Seems like NLY/AGNC got beat up with the rest of the market (shoot first ask questions later), but both are trading below their Tangible Book Values, so both look pretty attractive candidates for put-selling/long-term holdings. Thank you for your content!
Great video, as always. One question on margin. When you sell puts you do need to worry about margin in case the stock gets assigned to you. Am I right or am I missing something?
Yes you need to manage your cash requirements. However, over a certain size, one qualifies for portfolio margining rather than position margining. So other securities in my portfolio act as margin collateral.
Mark, would you mind sharing your insight for those younger investors with high (~40-50%) marginal tax rates and low percentage of holdings in tax-protected accounts? Options and REITs kick off a lot of regular income. When I run the numbers I can't help but think leveraged beta exposure and buy+hold will outperform on an after tax basis for me, by avoiding taxes until I am done accumulating.
Great video as always, Mark. Question, I understand the use of Net Tangible Book Value as a reference price point since it's comprised primarily of financials assets listed at fair value. However, does this thinking only apply for mortgage REITS, or can it be applied to equity REITS as well?
Great explanatory video. So from what I understand you are not thinking AGNC as a long term investment? Since there are chances your stocks will be called away?? Do you use this strategy for all of your stocks or just a handful? Thanks
Roughly 90 cents + dividend, which is 1.18 $ per share monthly. The return would be 9%. If he was selling 15 days put, the return would roughly double, of course, the price has to stick around 12.2.
Mark, Your recent videos about AGNC intrigued me to look up AGNC earning release. I am trying to connect what you showed in the video to the statement. I have two questions would like to ask. The extract below is before Q&A section. And in case you want to locate the context. www.fool.com/earnings/call-transcripts/2020/04/30/agnc-investment-corp-agnc-q1-2020-earnings-call-tr.aspx From CEO, Gary Cain, " hedging a levered position in Agency MBS require substantial trade-offs as we seek to balance the risk of both significant declines and increases in interest rates on the duration of our assets." My question: can you explain the levered position and how they do the hedge? From Chris Kuehl, " However, we do expect that roll specialness will improve in the coming months and may average 25 basis points through repo given current origination and Fed purchase dynamics. As you can see, even without a roll implied financing advantage based on our assumptions potential gross returns on 30-year 2.5s pre-convexity cost were solidly in the mid teens as of March 31st. " My question: is the roll specialness same thing as financing advantage (lower financing cost)? How do I connect that in your dollar roll explanation/example? Thank you so much.
.60 cents ? for $14 dollar calls I just don't see that happening you can go out to Dec nevermind June n you wont get .60 cents ...maybe .46 cents n that's after the stock moves up a buck to 12.50/sh
How are you doing? I would like to sell cash secured puts on AGNC and get the shares at a discount and get the credit. If I get assigned start getting the 0.12 dividends.
Delighted to follow your regular coverage of ABR and AGNC! great content Mark!
Professor Meldrum doing the Wheel strategy, good one.
great insight mark, loved your analysis on the covered call position. Very informative.
Great video professor! Would like to ask you two questions:
1. Do you actually have to own the underlying to sell calls?
2. As you mentioned at min 6:52, if you see the price drifting up you would adjust your bands and move your puts and calls up. I am wondering if you will open these new positions after your previous puts-calls expire or you can actually close/modify your previous positions before expirations?
Thank you for your time.
This separate video model must be working out for people (like me) with short attention span . Thanks Dr.Meldrum .
How has the outlook been from these analyst prices turned out in the past for you?
Hello,
What are your thoughts on Annaly (NLY)? Looks like a similar business compared to AGNC. NLY has 93% assets backed by agencies whereas AGNC obviously has 100% backed by agencies.
I believe if NLY was going to report earnings soon, then they probably would have cut their dividends. But they just reported their earnings and paid out a quarterly dividend as well. If the economy starts to open up, I can't see a very likely scenario where they end up cutting their dividends.
Seems like NLY/AGNC got beat up with the rest of the market (shoot first ask questions later), but both are trading below their Tangible Book Values, so both look pretty attractive candidates for put-selling/long-term holdings.
Thank you for your content!
Great video, as always. One question on margin. When you sell puts you do need to worry about margin in case the stock gets assigned to you. Am I right or am I missing something?
Yes you need to manage your cash requirements. However, over a certain size, one qualifies for portfolio margining rather than position margining. So other securities in my portfolio act as margin collateral.
Mark, would you mind sharing your insight for those younger investors with high (~40-50%) marginal tax rates and low percentage of holdings in tax-protected accounts? Options and REITs kick off a lot of regular income. When I run the numbers I can't help but think leveraged beta exposure and buy+hold will outperform on an after tax basis for me, by avoiding taxes until I am done accumulating.
Thank you
Great video as always, Mark. Question, I understand the use of Net Tangible Book Value as a reference price point since it's comprised primarily of financials assets listed at fair value. However, does this thinking only apply for mortgage REITS, or can it be applied to equity REITS as well?
Not really. NOI is influenced by management to a high degree - CAPEX, upgrades, types of tenants, terms of leases, etc...
@@MarkMeldrum I supposed not, makes sense. Appreciate the response!
Mark, what hardware and software are you using to draw?
It’s Sketchbook with a Cintiq.
I actually use Interactive Brokers.
Great explanatory video. So from what I understand you are not thinking AGNC as a long term investment? Since there are chances your stocks will be called away?? Do you use this strategy for all of your stocks or just a handful? Thanks
No - AGNC is a long-term investment. I just don't see it trading at a premium to tangible book.
You seem to be both asking me and accusing me in the same sentence. No I didn’t. What would be inconvenient about that.
How much could you expect to make on a monthly basis and what would your annual return percentage be?
Roughly 90 cents + dividend, which is 1.18 $ per share monthly. The return would be 9%. If he was selling 15 days put, the return would roughly double, of course, the price has to stick around 12.2.
Do you just constantly hold AGNC, and make profit selling puts, or do you decide to sell the equity when you think the price is too high
Hold the stock, sell the calls. I want that dividend. If the price gets too high, I will sell covered calls.
Mark Meldrum I sold some 5/15 puts @12 back in early May, and today the stock got up to 12! Good stuff!
From the february 10-k I get tangible book value around 14.15~. I must be missing an intangible somewhere...can someone help me out
You are looking at December 31 statements. AGNC released an update reporting that March 31 tangible BVPS is 13.62
Hi Mr Meldrun, do you happen by any chance to teach courses on trading strategies? i would be willing to enroll in it
No I don't - only what i do on this channel, and on my site for CFA candidates.
@@MarkMeldrum oh OK, understood.
Mark,
Your recent videos about AGNC intrigued me to look up AGNC earning release. I am trying to connect what you showed in the video to the statement. I have two questions would like to ask. The extract below is before Q&A section. And in case you want to locate the context. www.fool.com/earnings/call-transcripts/2020/04/30/agnc-investment-corp-agnc-q1-2020-earnings-call-tr.aspx
From CEO, Gary Cain, " hedging a levered position in Agency MBS require substantial trade-offs as we seek to balance the risk of both significant declines and increases in interest rates on the duration of our assets."
My question: can you explain the levered position and how they do the hedge?
From Chris Kuehl, " However, we do expect that roll specialness will improve in the coming months and may average 25 basis points through repo given current origination and Fed purchase dynamics. As you can see, even without a roll implied financing advantage based on our assumptions potential gross returns on 30-year 2.5s pre-convexity cost were solidly in the mid teens as of March 31st. "
My question: is the roll specialness same thing as financing advantage (lower financing cost)? How do I connect that in your dollar roll explanation/example? Thank you so much.
.60 cents ? for $14 dollar calls I just don't see that happening you can go out to Dec nevermind June n you wont get .60 cents ...maybe .46 cents n that's after the stock moves up a buck to 12.50/sh
Its not a baseball game - I don't have to swing at every pitch. I can wait until I get the price I want.
How are you doing? I would like to sell cash secured puts on AGNC and get the shares at a discount and get the credit. If I get assigned start getting the 0.12 dividends.