Looking back to 41 days ago, Armstrong World Industries Inc (AWI) priced a 12,057,382 share secondary stock offering at $51.75 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 7% higher than the offering price.Investors who did not participate in the offering but would be a buyer of AWI 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 $45 strike, which has a bid at the time of this writing of 65 cents. That would result in a cost basis of $44.35 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 1.4% return against the $45.00 purchase commitment, or a 3.5% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Options Strategy If You Would Buy AWI Below Its $51.75 Offering Price
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