Looking back to 132 days ago, XPO Logistics (XPO) priced a 9,694,027 share secondary stock offering at $22.75 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 Tuesday, the stock is now 5.9% above the offering price.Investors who did not participate in the offering but would be a buyer of XPO 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 65 cents. That would result in a cost basis of $19.35 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 3.2% return against the $20.00 purchase commitment, or a 7.9% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy XPO at a 22% Discount
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