Options Trading News

February 12, 2013  Tue 11:54 AM CT

Union Pacific has run to all-time highs, and traders are betting that the railroad operator will hold onto most of its recent gains.

More than 9,300 March 130 puts traded in a strong selling pattern today, led by a block of 8,235 that went for $1.20, according to optionMONSTER's tracking systems. The volume was more than 10 times the strike's open interest of just 878 contracts before the session began, clearly showing that these are new positions.

The put sellers are counting on UNP to stay above $130 through expiration in mid-March. If it falls below that strike price, the traders will face the obligation to buy the shares. (See our Education section)

UNP is up 0.79 percent to $134.48 this afternoon. The stock bounced sharply at the $116 level in mid-November and ran to a lifetime high of $136.19 on Jan. 23.

Total option volume in the name is nearly 13,000 so far today, almost triple its full-session average.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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