Looking back to 71 days ago, Boyd Gaming Corp. (BYD) priced a 16,500,000 share secondary stock offering at $12.00 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 Friday, the stock is now 13.6% higher than the offering price.Investors who did not participate in the offering but would be a buyer of BYD 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 2015 put at the $10 strike, which has a bid at the time of this writing of $1.30. That would result in a cost basis of $8.70 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 13% return against the $10.00 purchase commitment, or a 10.2% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Miss BYD's $12 Offering But Think It's A Steal At $10?
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