Looking back to 33 days ago, Tsakos Energy Navigation Ltd.
(Symbol: TNP) priced a 11,300,752 share secondary stock offering at
$6.65 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
Wednesday, the stock is now 7.5% above the offering price.
Investors who did not participate in the offering but would be a
buyer of TNP 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 $5 strike, which has a bid at the time of this writing of 10
cents. That would result in a cost basis of $4.90 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 2% return against the $5.00
purchase commitment, or a 3.7% 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 TNP'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 TNP
shares, versus its 200 day moving average:
Looking at the chart above, TNP's low point in its 52 week range is
$3.29 per share, with $8.17 as the 52 week high point - that
compares with a last trade of $7.19.
The current annualized dividend paid by Tsakos Energy Navigation
Ltd. is $0.20/share, currently paid in quarterly installments, and
its most recent dividend ex-date was on 12/10/2013. Below is a
long-term dividend history chart for TNP, which can be of good help
in judging whether the most recent dividend with approx. 2.8%
annualized yield is likely to continue.
According to the ETF Finder at ETF Channel, TNP makes up 4.13% of
the Guggenheim Shipping ETF (Symbol: SEA) which is trading lower by
about 0.2% on the day Wednesday.
Top YieldBoost Puts of of Stocks with Recent