Looking back to 119 days ago, Tesoro Logistics LP (TLLP) priced a 6,300,000 share secondary stock offering at $51.05 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 24.9% above the offering price. It should be noted that investors at the secondary have collected $0.56/share in dividends since the time of their purchase, so they are currently up 26.0% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of TLLP 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 June put at the $50 strike, which has a bid at the time of this writing of 15 cents. That would result in a cost basis of $49.85 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 0.3% return against the $50.00 purchase commitment, or a 1.1% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy TLLP at a 23% Discount
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts