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Union Pacific Corp (Symbol: UNP) commenced trading new options for December 2027 today. The new contracts provide a unique opportunity for sellers of puts or calls, given the 878 days remaining until expiration.
One highlighted put contract has a strike price of $225.00, currently bid at $26.50. Selling this contract would set a potential cost basis of $198.50 per share, representing a 2% discount from the current trading price of $228.43. The likelihood that this contract could expire worthless is estimated at 64%, offering an 11.78% return on the cash commitment, or 4.90% annualized.
Additionally, a call contract at the $245.00 strike price is bid at $27.90. Selling this as a covered call while holding shares at $228.43 could yield a total return of 19.47% if called away by expiration. The odds of this contract expiring worthless are currently 45%, providing a potential 12.21% return boost, or 5.08% annualized.
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