Friday, 12 June 2015

Options Trade - United Pacific

On June 10, I sold a put in UNP. The trade:

Sold 1 UNP Put Jan 20 '17 $100 Put @ 12.70 ($11.20 commission + $0.03 SEC fee)

Days Held (sell date to expiry): 590

Net Premium: $1,258.77

Annualized Return = ($1,258.77 / ($10,000 - $1,258.77)) * 365/590 = 8.9%

The most likely outcomes of this trade are:

1. Shares are trading above $100.00 at expiration. I will get to keep $1258.77 in net premiums.

2. UNP is trading below $100.00 at or before expiration and shares are assigned. I will receive 100 shares of UNP at a net cost of $87.41/share.

3 comments:

  1. Do you really think youll hold this until '17? Or do you hope to buy it back if UNP goes higher at some point.

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    Replies
    1. Very good question. Frankly, I don't know. If the share price rapidly increases, I might sell for a quick gain. I did that with CAT, EMR, L, SBUX and SU earlier this year. But I've also let some expire worthless.

      And all puts i sell are naked puts, not cash secured puts. So the cash I have can be used to buy stocks. Moreover, my naked puts are in a margin account so if I get put a stock, I can use margin. I havn't done this yet and don't plan to, but it's a security blanket...sort of.

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