Looking back to 121 days ago, Molycorp (MCP) priced a 45,000,000 share secondary stock offering at $5.00 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 7.2% above the offering price.Investors who did not participate in the offering but would be a buyer of MCP 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 January 2015 put at the $3 strike, which has a bid at the time of this writing of 37 cents. That would result in a cost basis of $2.63 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 12.3% return against the $3.00 purchase commitment, or a 13.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy MCP at a 53% Discount
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