Options Trading News

March 1, 2013  Fri 4:45 AM CT

Union Pacific hit an all-time high yesterday, and one trader has faith that it will gain even more in coming weeks.

optionMONSTER's Heat Seeker system detected the sale of 2,500 March 135 calls for $3.75 and, at the same second, the purchase of 2,500 March 140 calls for $2.90 in the final 15 minutes of yesterday's session. Volume was below the previous open interest in the March options but below it in the April contracts.

This indicates that an investor is closing the in-the-money March 135 calls, likely with a profit, and is using some of the proceeds to stay in the trade for another month at a strike that is $5 higher. The new long calls are looking for UNP to rally above $140 by expiration on April 19, one day after its first-quarter earnings report. (See our Education section)

UNP rose 0.29 percent to $137.11 yesterday after hitting a lifetime high of $138.51 earlier in the session as it continued to rally along with many other names in the transportation sector. The railroad operator is scheduled to present at the Raymond James Annual Institutional Investors Conference on Tuesday and the J.P. Morgan Aviation, Transportation, and Defense Conference on Wednesday.

Total UNP option volume was just shy of 9,300 contracts yesterday, more than double its daily average in the last month. Calls outpaced puts by more than 3.5 to 1.
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »