Looking back to 90 days ago, Realty Income Corp. (O) priced a 12,000,000 share secondary stock offering at $39.96 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 10.4% above the offering price. It should be noted that investors at the secondary have collected $0.55/share in dividends since the time of their purchase, so they are currently up 11.8% on their purchase from a total return basis.Investors who did not participate in the offering but would be a buyer of O 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 $35 strike, which has a bid at the time of this writing of 15 cents. That would result in a cost basis of $34.85 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 0.4% return against the $35.00 purchase commitment, or a 0.9% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy Realty Income at a 21% Discount
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