Looking back to 162 days ago, Crestwood Midstream Partners LP (CMLP) priced a 14,000,000 share secondary stock offering at $21.19 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 5.2% higher than the offering price. It should be noted that investors at the secondary have collected $0.41/share in dividends since the time of their purchase, so they are currently up 7.2% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of CMLP 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 October put at the $20 strike, which has a bid at the time of this writing of 70 cents. That would result in a cost basis of $19.30 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 3.5% return against the $20.00 purchase commitment, or a 6.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy CMLP at a 14% Discount
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