Looking back to 84 days ago, Tesoro Logistics LP (Symbol: 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 10.7% 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 11.8% 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 September put at
the $50 strike, which has a bid at the time of this writing of
$1.65. That would result in a cost basis of $48.35 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 3.3% return against the $50.00
purchase commitment, or a 5.5% annualized rate of return (at Stock
Options Channel we call this the
Secondaries can often present buying opportunities for bullish
investors interested in purchasing shares, because the sudden extra
supply of stock tends to require that the offering be priced at an
attractive discount to where the stock had previously been trading
before the offering announcement. That can also introduce near-term
volatility which improves the premiums a put seller can achieve.
Selling a put does not give an investor access to TLLP's upside
potential the way owning shares would, because the put seller only
ends up owning shares in the scenario where the contract is
exercised. The chart below shows the one year performance of TLLP
shares, versus its 200 day moving average:
Looking at the chart above, TLLP's low point in its 52 week range
is $45.13 per share, with $71.92 as the 52 week high point - that
compares with a last trade of $57.50.
The current annualized dividend paid by Tesoro Logistics LP is
$2.26/share, currently paid in quarterly installments, and its most
recent dividend ex-date was on 01/30/2014. Below is a long-term
dividend history chart for TLLP, which can be of good help in
judging whether the most recent dividend with approx. 4.0%
annualized yield is likely to continue.
According to the ETF Finder at ETF Channel, TLLP makes up 6.70% of
the Junior MLP ETF (Symbol: MLPJ) which is trading up by about 0.4%
on the day Tuesday.
Top YieldBoost Puts of of Stocks with Recent