The good news.. AGG will distribute .342 per share on October 7th, also good news, I sold my AGG at 104.90 on October 2nd, $0.18 higher than what I bought it at on the September 29th. So far so good. The bad news, PST, the double inverse 7-10 year treasury bond fund dropped like a rock-- dropping as low as 51.09 -- from my buying price of 52.36. The dumb news: of course the long 7-10 year treasury bond funds goes ex-dividend on the first of the month also, and the short funds make sure there is no hedge opportunity there. Its payout was .25. PST closed at 51.55 today, so overall I am +(.34+.18)*100- .81*50 = +$7 per every 100 shares of AGG invested. Not too exciting.
The timing of the ex-dividend was interesting. The market on that day was off pretty strongly, and investors were bailing out of equities and apparently moving into bonds--that sector had a good day. AGG traded at least briefly at 104.72, which would have gotten me out at my entry price.
The equities market is rebounding, and the bond funds seem to be weakening a bit. I might hang on a bit and try to get back to my original .33 per share goal.
Final 8-October
PST dropped nearly to 51.00 yesterday, and the general trend line is disturbing, so when I saw PST bounce back to 51.66 I decided to close things out. Final profit (+.34+.18)*100- .70*50 = +$17. This is 0.17 cents per share of AGG. In general this experience reinforced my impression that it is tough to find a good hedge for a dividend capture play--in this case the ex-dividend date synchronization of the various bond type funds on the 1st of the month was my downfall. Glad to get out with an overall profit.
Monday, October 05, 2009
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