Constellation Energy Group (CEG / LLJAE): Covered Call Opportunity

At $19 per share, CEG is trading 40% below the offer price stipulated in its merger agreement with MidAmerican Energy. It appears intelligent to buy CEG in round lots and to sell a corresponding number of $25 call options. One-fourth of the premium received constitutes “free money,” and the investor’s cost basis can be reduced to $17 per share.

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