Comments on: Annaly poised to profit from looming Fed Cuts http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/ High Return Investing with Dax Fri, 18 Dec 2009 10:01:37 +0000 http://wordpress.org/?v=2.9 hourly 1 By: Dax Desai http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-8430 Dax Desai Tue, 18 Mar 2008 15:33:44 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-8430 Kimberly - Yes I still believe it will respond positively. Any cut above 50 basis point should propel it to near $19 range. Also encouraging is that many insiders have been exercising stock options over the last several weeks to buy the stock. Three of the transactions have occurred since March 7, 2008, the last being a director purchase of 8,500 shares yesterday. Contrast this with Bear Stearns where insiders were dumping their shares. Thanks Kimberley for posting- You reminded me about Annaly and I picked up 6 Sep 08 $17.50 contracts @ .90 each. Time will tell, but now I have skin in the game to backup my comments. Kimberly – Yes I still believe it will respond positively. Any cut above 50 basis point should propel it to near $19 range.

Also encouraging is that many insiders have been exercising stock options over the last several weeks to buy the stock. Three of the transactions have occurred since March 7, 2008, the last being a director purchase of 8,500 shares yesterday. Contrast this with Bear Stearns where insiders were dumping their shares.

Thanks Kimberley for posting- You reminded me about Annaly and I picked up 6 Sep 08 $17.50 contracts @ .90 each. Time will tell, but now I have skin in the game to backup my comments.

]]> By: Dax Desai http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-8429 Dax Desai Tue, 18 Mar 2008 15:32:53 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-8429 Kimberly - Yes I still believe it will respond positively. Any cut above 50 basis point should propel it to near $19 range. Also encouraging is that many insiders have been exercising stock options over the last several weeks to buy the stock. Three of the transactions have occurred since March 7, 2008, the last being a director purchase of 8,500 shares yesterday. Contrast this with Bear Stearns where insiders were dumping their shares. Kimberly – Yes I still believe it will respond positively. Any cut above 50 basis point should propel it to near $19 range.

Also encouraging is that many insiders have been exercising stock options over the last several weeks to buy the stock. Three of the transactions have occurred since March 7, 2008, the last being a director purchase of 8,500 shares yesterday. Contrast this with Bear Stearns where insiders were dumping their shares.

]]> By: Kimberly Sabaugh http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-8425 Kimberly Sabaugh Tue, 18 Mar 2008 10:43:24 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-8425 Dear Dax How much of a Fed cut will be necessary to take Annaly stock northward? Dear Dax
How much of a Fed cut will be necessary to take Annaly stock northward?

]]> By: Kimberly Sabaugh http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-8424 Kimberly Sabaugh Tue, 18 Mar 2008 10:40:49 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-8424 Dear Dax Do you still believe Annaly Capital stock will respond favorably to a Fed cut? And if so, how large a cut? Dear Dax
Do you still believe Annaly Capital stock will respond favorably to a Fed cut? And if so, how large a cut?

]]> By: Entrecard link love - week 7 | Money Relations - Finance and investment blog. http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6689 Entrecard link love - week 7 | Money Relations - Finance and investment blog. Sun, 27 Jan 2008 12:27:15 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6689 [...] with Dax - Dax believes that Annaly Capital Management is a good candidate to profit from the Fed cuts and he’s made a play on it. He might have [...] [...] with Dax – Dax believes that Annaly Capital Management is a good candidate to profit from the Fed cuts and he’s made a play on it. He might have [...]

]]> By: Arohan http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6617 Arohan Thu, 24 Jan 2008 16:51:05 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6617 Dax, did you complete your trade? I think the financials have bottomed now and anyone with some guts to pick through the ruins will do really well Recession is just a cycle and it eventually ends. Problem is that normally we do not know we are in recession until it is almost over. And I think we have been in a recession for some time now and now is the time to commit Dax, did you complete your trade? I think the financials have bottomed now and anyone with some guts to pick through the ruins will do really well

Recession is just a cycle and it eventually ends. Problem is that normally we do not know we are in recession until it is almost over. And I think we have been in a recession for some time now and now is the time to commit

]]> By: Adrian http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6492 Adrian Sun, 20 Jan 2008 01:13:20 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6492 The recession side of things would be one of my biggest fears with any investment/trade at the moment, especially with recessions both looming in US and UK (and indeed global economies). I also don't believe any company can be completely insulated against the risk of a recession and the next few months could get very interesting. The recession side of things would be one of my biggest fears with any investment/trade at the moment, especially with recessions both looming in US and UK (and indeed global economies). I also don’t believe any company can be completely insulated against the risk of a recession and the next few months could get very interesting.

]]> By: Dan http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6396 Dan Tue, 15 Jan 2008 17:07:32 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6396 Awesome, thanks for the clarification. I'm reading your other blog post. Awesome, thanks for the clarification. I’m reading your other blog post.

]]> By: Dax Desai http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6395 Dax Desai Tue, 15 Jan 2008 17:01:56 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6395 Dan - For one the Jan 08 option expires in 3 days! With options, what you pay is your premium. The premium is really summed up by 2 factors. One is the time. For longer options you are buying time more so than anything else. The second facor is how far in/out of the money the option is. I usually go for a longer option when I am confident in its long-term movement vs its short-term movement. If I bought for example a Feb Call and there is some minor event that causes a blip overall in the market, my call may lose tremendous value. After all your option looks at the probability that it will end in the money. If 10 days before it expires, it goes down 25% what do you think the odds are in the next 10 days it will be in the money? Your option experiences time decay, meaning you have less time for your stock to move. The closer it gets to expiration, all your time value in your option is gone. The bet here is that the other component the movement of the stock price will be enough to offset your time decay. With a short option the time decay is very rapid as it approaches expiration. Shorter term options also offer big movements both up/down if there is significant development in your stock. You might want to read my blog post about LEAPS vs Stocks. A Leap is a long-term option.... http://www.daxdesai.com/2007/05/22/why-buy-call-leap-options-instead-of-stocks/ Dan -

For one the Jan 08 option expires in 3 days! With options, what you pay is your premium. The premium is really summed up by 2 factors. One is the time. For longer options you are buying time more so than anything else. The second facor is how far in/out of the money the option is.

I usually go for a longer option when I am confident in its long-term movement vs its short-term movement. If I bought for example a Feb Call and there is some minor event that causes a blip overall in the market, my call may lose tremendous value. After all your option looks at the probability that it will end in the money. If 10 days before it expires, it goes down 25% what do you think the odds are in the next 10 days it will be in the money? Your option experiences time decay, meaning you have less time for your stock to move. The closer it gets to expiration, all your time value in your option is gone. The bet here is that the other component the movement of the stock price will be enough to offset your time decay.

With a short option the time decay is very rapid as it approaches expiration. Shorter term options also offer big movements both up/down if there is significant development in your stock.

You might want to read my blog post about LEAPS vs Stocks. A Leap is a long-term option…. http://www.daxdesai.com/2007/05/22/why-buy-call-leap-options-instead-of-stocks/

]]> By: Dan http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/comment-page-1/#comment-6382 Dan Tue, 15 Jan 2008 04:29:28 +0000 http://www.daxdesai.com/2008/01/14/annaly-poised-to-profit-from-looming-fed-cuts/#comment-6382 What's the pros and cons of buying an option that far out compared to buying a Jan 08? Trying to learn bits and pieces about options. What’s the pros and cons of buying an option that far out compared to buying a Jan 08?

Trying to learn bits and pieces about options.

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