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After high-profile investments in Goldman Sachs (NYSE: GS - News) and GE (NYSE: GE - News), Buffett made a lower-profile move last week when a unit of his company, Berkshire Hathaway (NYSE: BRK-A - News, BRK-B - News), sold puts in railroad Burlington Northern Santa Fe (NYSE: BNI - News), according to filings with the SEC.
The puts have strike prices of $77 and $80 and expire in December. By selling the puts, Berkshire has pocketed a premium and is obligated to purchase Burlington Northern at $80 and $77 if the stock is trading below those prices on the day the option expires. Essentially, Buffett is betting that Burlington Northern is unlikely to drop below around $71, his effective cost basis if the $77 puts are exercised. (His cost basis on the $80 puts is around $73).
The bottom line is that Buffett appears to be maintaining his bullish view of railroads, a view that he has held since early 2007 when he first disclosed
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网上看到的, 请高手帮我科普一下:
1, By selling the put, did Buffet make money?
2, How do the prices "$71" and "$73" come from?
3, By selling the put, why is he obligated to purchase Burlington Northern at $80 and $77 if the stock is trading below those prices on the day the option expires?
Thanks!