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Strategies & Market Trends : Calls and Puts for Income

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To: Jerome who wrote (1033)	7/27/2007 2:09:01 PM
From: Bridge Player	Read Replies (2) of 5891

AHM is trading at 10.28 with the August 10 calls at 1.70 bid. Is it just possible all the sub-prime and bad loads business is a little overdone? With a 8.58 cost basis, the dividend was .70, suppose they cut it to .25. That's an 11.6% yield. Suppose they cut it out entirely. I believe the latest book value was around $20. If half of their loans are bad and they write down by 50% the cost basis would be under book. Forget about yield-if-called. It's crazy. And at the end of August, if not called, there's Sep, and Oct, and Nov. ........... I bought quite a lot of this yesterday at average prices of 10.71, and wrote Aug 10's and 12.5s.

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