Agnc call spread, is the risk reward good?

Quote from newwurldmn:

It's a fine strategy if you have a view that the stock will rally from now to that one day.

If you have this view, I wouldn't have the callspread. The risk is operational and the bid/offer you pay but that can be minor. Personally I would have done the october calls outright as they require less premium and will be more liquid, and better, I would just buy the stock.

If you don't have a view that the stock will rally ex-dividend date then you don't really have any reason to have any position.

The callspread only makes sense if you think the stock ex-dividend will have a muted rally and at that all the way to december.

Techincally it's not a 20% return as you will need cash to buy the stock when you exercise.
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Or if I don't have the cash, I could just sell the call the day before dividen & buy back the call the next day for reduced price.
Also I don't need to have a view that the stock will rally, if the stock goes down to 28, I would still make money by keep selling the 29 calls.
 
Quote from spindr0:

Ergo, that's why if you like the position, you leave it as is. Exercising and rebuying costs slippage and add'l commissions and adds overnight risk since the open may be lower. What are you gaining in return for that? Zilch.

OTOH, the AM open could be higher and thru dumb luck, you do better. But that's not what spreads are about.
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If I keep holding the call and not exercise, I would be loosing out because, I will not receive any dividend, stock will go down, and my call strike stays the same.
 
Quote from optionnew:

If I keep holding the call and not exercise, I would be loosing out because, I will not receive any dividend, stock will go down, and my call strike stays the same.
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I don't know what "my call strike stays the same" means. I don't think you meant the call premium because then, everyone in the world would be buying ITM calls that don't lose money when the stock goes ex-div and shorting the stock that does lose $1.40 due to ex-div. Ahhhh, the FANTEX???
 
Quote from spindr0:

I don't know what "my call strike stays the same" means. I don't think you meant the call premium because then, everyone in the world would be buying ITM calls that don't lose money when the stock goes ex-div and shorting the stock that does lose $1.40 due to ex-div. Ahhhh, the FANTEX???
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From all of your questions it seems you can use some learning on 'option and dividend' and how they relate.
 
Quote from optionnew:

Or if I don't have the cash, I could just sell the call the day before dividen & buy back the call the next day for reduced price.
Also I don't need to have a view that the stock will rally, if the stock goes down to 28, I would still make money by keep selling the 29 calls.
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What is the bid/offer of selling the call and rebuying it?
What will you do with the short call?
If your short call is not exercised against you will you hold the position to maturity or cut it after the dividend?

You have a buywrite with the intention of holding to december it's a decent trade. If you are going to cut the position and then reenter it then it is a lot of extra commissions and bid/offer.
 
Quote from newwurldmn:

What is the bid/offer of selling the call and rebuying it?
What will you do with the short call?
If your short call is not exercised against you will you hold the position to maturity or cut it after the dividend?

You have a buywrite with the intention of holding to december it's a decent trade. If you are going to cut the position and then reenter it then it is a lot of extra commissions and bid/offer.
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Don't want to hold the position itself, but I will gladly pay the extere 20-30¢ for comissions & spread to have only a 'fraction' of the risk
 
Quote from optionnew:

Don't want to hold the position itself, but I will gladly pay the extere 20-30¢ for comissions & spread to have only a 'fraction' of the risk
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I'm not following. What is your plan with this position? Unwind the position before the dividend? Re-establish it and hold to Dec expiry? If so, why buy the position now unless you think the stock will rally > delta*30 cents.
 
Quote from optionnew:

From all of your questions it seems you can use some learning on 'option and dividend' and how they relate.
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The content of you posts is the judge of that.
 
Quote from newwurldmn:

I'm not following. What is your plan with this position? Unwind the position before the dividend? Re-establish it and hold to Dec expiry? If so, why buy the position now unless you think the stock will rally > delta*30 cents.
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I leave it to you to edumacate him as to why exercising his long call to capturie the dividend, selling the stock and buying the same call back does not reduce his risk. In one era and out the other :)
 
Quote from newwurldmn:

I'm not following. What is your plan with this position? Unwind the position before the dividend? Re-establish it and hold to Dec expiry? If so, why buy the position now unless you think the stock will rally > delta*30 cents.
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hold the call till teusday, exercise, sell stock on wensday. If dec call was not exercised buy back Jan call, hold call untill dec, get exercised in december. If agnce goes to $15 from now till dec, my loss is $2-$3 vs. $13 if I own the stock, for that I pay a little more comission. Clear enough?
 
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