Is Norfolk Southern back on track?
David Russell | [email protected]
Barely a month ago, optionMONSTER's Heat Seeker monitoring system detected buying in the January 82.50 calls for $1.25. At the time, NSC had never traded over $81, so traders were positioning for a breakout to new highs.
They got it today after earnings and revenue beat expectations, with good numbers that resulted from strong shipments and lower expenses. NSC is up 5.27 percent to $84.85 in afternoon trading.
Now the Heat Seeker is flashing bullishly once again. This time, traders sold about 5,000 of those January 82.50 calls for $3.10 and bought 2,500 January 87.50 calls for $1.15. He or she collected $1.26 million in the process and remain exposed to further gains if the stock keeps making new highs.
Management said growth in the chemical, metals, construction, automotive, and intermodal segments offset weak coal traffic. Its operating ratio--costs divided by revenue--declined 3 full percentage points.
Railroads are one of the strongest groups today, according to our researchLAB market-analysis tool. That's keeping transports positive despite losses in the broader market.
Overall option volume in NSC is 8 times greater than average so far today, according to Heat Seeker. Calls outnumber puts by more than 4 to 1.