Transportation Stock Could Have More Room to Run

It could be a good time to speculate on UNP with short-term options

Sep 5, 2019 at 2:43 PM
facebook twitter linkedin

Union Pacific Corporation (NYSE:UNP) just popped up in a study from our Senior Quantitative Analyst Rocky White, showing that the stock has historically posted huge returns after pulling back to the 320-day moving average. Going by the numbers, UNP shares have been higher one month out following the last three encounters with the trendline, with an average one-month gain of 14.2%.

unp stock sept 5

UNP is 3.8% higher today at $166.20, benefiting from broad-market tailwinds, as it tries to break north from a recent series of lower lows following its Aug. 1 peak of $180.54. Another move from the 320-day moving average near the historical return detailed above would have the stock well above this high, closer to the $190 area.

Short-term options traders do not appear to be positioned for an upside move. Our Schaeffer's front-month gamma-weighted put/call open interest ratio (SOIR) stands at 1.20, showing put open interest outweighs call open interest for near-the-money contracts in the September series. Peak open interest overall is actually up at the September 175 call.

Staying with our internal options trading indicators, it would also seem to be a good time to target short-term contracts. This is according to Union Pacific's Schaeffer's Volatility Index (SVI) of 25%, which ranks in the 38th annual percentile, revealing relatively fair volatility expectations priced into near-term contracts at the moment.

Finally, it's worth noting that there's plenty of bearish attention lingering in the analyst community, so there's fuel there for upgrades should a rally actually ensue. As it stands now, eight of the 18 covering brokerage firms rate UNP stock a "hold" or "strong sell."



Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners