Looking back to 135 days ago, Crosstex Energy LP (XTEX) priced a 7,200,000 share secondary stock offering at $20.33 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 27% above the offering price. It should be noted that investors at the secondary have collected $0.33/share in dividends since the time of their purchase, so they are currently up 28.6% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of XTEX 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 May 2014 put at the $20 strike, which has a bid at the time of this writing of 45 cents. That would result in a cost basis of $19.55 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 2.2% return against the $20.00 purchase commitment, or a 4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For A Chance To Buy Crosstex Energy At A 25% Discount
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