Looking back to 23 days ago, Memorial Production Partners LP (MEMP) priced a 14,500,000 share secondary stock offering at $19.90 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 6.8% above the offering price.Investors who did not participate in the offering but would be a buyer of MEMP 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 April 2014 put at the $17.50 strike, which has a bid at the time of this writing of 50 cents. That would result in a cost basis of $17.00 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 2.9% return against the $17.50 purchase commitment, or a 5.9% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For A Chance To Buy MEMP At A 20% Discount
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