Looking back to 79 days ago, Newcastle Investment Corp (NCT) priced a 50,450,952 share secondary stock offering at $5.25 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 5.8% above the offering price. It should be noted that investors at the secondary have collected $0.10/share in dividends since the time of their purchase, so they are currently up 7.7% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of NCT 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 August put at the $5 strike, which has a bid at the time of this writing of 25 cents. That would result in a cost basis of $4.75 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 5% return against the $5.00 purchase commitment, or a 9.6% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy NCT at a 15% Discount
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