Today, I sold 59 PUT options for Union Pacific<\/span><\/strong><\/a> with a strike price of $170.00 with a final date of February 19, 2021. PUTs are simply selling insurance that if the stock price drops to $170 per share, the Value Investment Fund will have to buy them from the owner of the puts. Today, the PUT for $170 is selling for $6.60 each. See the BID column and the highlighted reference point. Thus, if exercised, the Fund will have to put up $10,090 including transaction fees.\u00a0<\/span><\/p>\n Since each PUT costs me $1.00 to transact, I net $5.60 each; thus I earn $330.40 from this.\u00a0 See the table below:<\/span><\/p>\n Why would I do this?<\/span><\/p>\n Because I want to own Union Pacific at $170 a share. The most recent high price for Union Pacific was $209.85 on 10\/16\/2020. Based on my Union Pacific Buy\/Sell Model<\/span><\/a><\/strong>, I desire a 17% market decline from a prior peak to purchase the stock. $170 is exactly a 19% decrease. I would love for someone to put it to me at that price.\u00a0<\/span><\/p>\n I feel real comfortable with this decision because I earn $330.40 on this transaction and the Value Investment Fund currently is holding excess cash.<\/span><\/p>\n Time stamp for this transaction is 10\/25\/2020.\u00a0<\/span>Act on Knowledge.<\/span><\/strong><\/p>\n![\"PUTs\"](\"https:\/\/businessecon.org\/wp-content\/uploads\/Options-PUTS-for-Union-Pacific-on-10-25-2020-for-Feb-19-2021.png\")
<\/p>\n