Shorting Fannie Mae (FNM)
Barron’s had a really bearish article on Fannie Mae (FNM) in today’s paper (the one hits my driveway on Saturday morning) and sure enough the street agreed with their logic. FNM opened the day down and kept going. After closing at 22.77 on Friday it went down to 18.50 and back above 20 briefly.
While FNM was trading around 19.76 I sold four April 27 naked calls (FNMDW) and received $287.00 after commissions. With implied volatility around 100 I was able to go $7 out of the money. If Barron’s is right, I could have gone big at the money, but for those premiums I figured I’d reduce my risk and keep it higher and safer. The chart looks like any rally could stall at a few places on its way back to the upper 20s, but if FNM makes a comeback, that will likely mean the rest of my portfolio will be coming back too and […]
Original post by Alex Fotopoulos