Looking back to 25 days ago, TCP Capital Corp. (TCPC) priced a 3,800,000.00 share secondary stock offering at $15.76 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 5.2% higher than the offering price.Investors who did not participate in the offering but would be a buyer of TCPC 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 February 2014 put at the $12.50 strike, which has a bid at the time of this writing of 5 cents. That would result in a cost basis of $12.45 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 0.4% return against the $12.50 purchase commitment, or a 1.2% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Options Strategy If You Would Buy TCPC Below Its $15.76 Offering Price
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