Looking back to 167 days ago, Agree Realty Corp. (ADC) priced a 1,725,000 share secondary stock offering at $27.25 per share. Buyers in that offering made a considerable investment into the company, expecting that their investment would go up over the course of time and based on early trading on Monday, the stock is now 6.8% above the offering price. It should be noted that investors at the secondary have collected $0.82/share in dividends since the time of their purchase, so they are currently up 9.8% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of ADC at a cheaper price, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2014 put at the $25 strike, which has a bid at the time of this writing of 20 cents. That would result in a cost basis of $24.80 per share before broker commissions in the scenario where the contract is exercised. If the contract is never exercised, the put seller would still keep the premium, which represents a 0.8% return against the $25.00 purchase commitment, or a 1.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Miss ADC's $27.25 Offering But Think It's A Steal At $25?
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