Looking back to 8 days ago, Medley Capital Corporation (MCC) priced a 6,000,000 share secondary stock offering at $13.00 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 Thursday, the stock is now 5.1% higher than the offering price.Investors who did not participate in the offering but would be a buyer of MCC 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 March 2014 put at the $12.50 strike, which has a bid at the time of this writing of 55 cents. That would result in a cost basis of $11.95 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 4.4% return against the $12.50 purchase commitment, or a 8.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Miss MCC's $13 Secondary But Think It's A Buy At $12.50?
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts