Looking back to 149 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 Thursday, the stock is now 21.2% higher than 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 22.3% 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 December put at the $50 strike, which has a bid at the time of this writing of 90 cents. That would result in a cost basis of $49.10 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 1.8% return against the $50.00 purchase commitment, or a 2.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy TLLP at a 21% Discount
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