Looking back to 94 days ago, Starwood Property Trust Inc. (STWD) priced a 25,000,000 share secondary stock offering at $24.30 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 11.9% higher than the offering price. It should be noted that investors at the secondary have collected $0.46/share in dividends since the time of their purchase, so they are currently up 13.8% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of STWD 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 June 2014 put at the $22.50 strike, which has a bid at the time of this writing of 25 cents. That would result in a cost basis of $22.25 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 1.1% return against the $22.50 purchase commitment, or a 2.1% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy STWD at a 18% Discount
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