Fannie Mae Preferred S (FNMAS)

[rjwince]

Defensive Position:

Also concerned about how far and fast these prefs could fall. While I havn't pulled the trigger I am considering the following:
Sell X number fnmao short. div 2 yr cmt -.18%
Buy X number fnmfn long. div greater of 7% or 10 yr cmt+ 2.375%
Theory: If good news fnmfn will go to $50 if not higher and will probably be called but fnmao will go to $35 to $40 due to low div.

If bad news both tank but can pocket the short bucks. I see the following problems: Execution of short sale and buying fnmfn which is thinly traded.

Best of luck to you Taint and I look forward to seeing all of us made whole