Looking back to 10 days ago, Atlas Resource Partners, L.P. (ARP) priced a 5,500,000 share secondary stock offering at $21.18 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 6.7% higher than the offering price.Investors who did not participate in the offering but would be a buyer of ARP 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 $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 7.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy ARP at a 16% Discount
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