This article discusses an apparent disconnect between the price of Realty Income (O) shares, and the price of options on the shares. It is assumed that this disconnect results from very high borrowing costs for Realty Income shares which have driven prices for puts well above where they would be under normal conditions. If readers are able to offer another explanation for the put prices, the explanations are welcomed.

A couple of minutes before the price of Realty Income shares spiked to $26.99 at the close of trading on December 24, shares traded at $26.40. Numerous March $30 puts traded during the day at the closing bid price of $5.20. The asking price for March $30 calls at the close of trading was 20 cents. Unless dividends are unexpectedly increased or cut, three dividends of 14.3 cents should be paid between now and when the March options expire.