patrick.net
An Antidote to Corporate Media
1,363,419 comments by 15,735 users - declarethecauses, Glock-n-Load, zzyzzx online now
« First « Previous Comments 7 - 8 of 8 Search these comments
I haven't really dug into CIM, and I'm not confident on my abilities to pull out deciding factors. I'm more curious if a hedging play would work here? Since the market it is at a high right now, it seems that the puts would be pretty cheap right now. Buy the puts now, wait for the stock to drop to 4ish, and hold it until the dividend.
I'm guessing it would be slightly speculative or perhaps only creating a risk without reward scenario, but if the dividends don't come out, people are going to jump ship pushing the stock down drastically. If they don't put out dividends it might be due to something blowing up on their side. Again stock plummets. You lose the 15cent hedge bet.
The dividend seems to cover the hedge placement, while the stock is so far undervalued that if it does pay out this next dividend (perhaps the next one as well) that it's value should be pushed up by investors, at which point you could lock in profits, or place another hedge on the next dividend, with hopefully the stock well above $4 by that time.
« First « Previous Comments 7 - 8 of 8 Search these comments
I've been looking at REIT's lately. I'm not sure if this company CIM will be around in a year, but they are paying out their dividends currently. Roughly 19% depending on when you pick up the stock.
They're priced at about $4.00 right now. I suspect they will either fold, or not. There probably won't be much in between. My main worry with them is they explode and go bankrupt.
I was thinking of buying CIM + options at $2.50 or perhaps even $4.00. This will prevent me from making money over the course of the next 6 months but should allow me to hold the stock long enough to see if they're going to see any kind of recovery. The dividend will cover the costs associated with the options, make it free to hold. If the stock goes belly up in the next 6 months, my call options exercise, if it pays the dividend, I lose the options but get the dividend and likely another 2 quarters of dividend payments will help solidify that the stock and force the price skywards.
I'm just wondering what others think of idea? It's not fool proof and I could easily encounter issues where I lose out.
Currently March 2011 $2.50 puts are asking $.05 and the $4.00 are asking $.30. Past dividends show about a 17 cent per quarter payout.