Looking back to 119 days ago, Enterprise Products Partners L.P. (EPD) priced a 8,000,000 share secondary stock offering at $62.05 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 8.2% higher than the offering price. It should be noted that investors at the secondary have collected $0.70/share in dividends since the time of their purchase, so they are currently up 9.3% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of EPD 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 2016 put at the $55 strike, which has a bid at the time of this writing of $2.70. That would result in a cost basis of $52.30 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 4.9% return against the $55.00 purchase commitment, or a 2.6% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy EPD at a 23% Discount
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