The study has 19 previous examples to take from, too
Union Pacific Corporation (NYSE:UNP) has been strong in recent weeks, and today the shares have moved above the $170 level, last seen up 0.2% at $170.45. From a longer-term perspective, the stock recently pulled back to the 10-month moving average, which historically been a good time to go bullish on the freight concern.
Schaeffer's Senior Quantitative Analyst Rocky White took data from the past 15 years and looked at similar pullbacks for UNP. There have been 19 other signals like this with the 10-month moving average, and they've resulted in an average three-month move of 7.7% for the stock. As it stands now, it's hard to say what this kind of price action would mean for Union Pacific options traders.
That's because two of our favorite options indicators show different pictures. On the one hand, the Schaeffer's put/call open interest ratio (SOIR) comes in at 1.45, and ranks in the 92nd annual percentile. In other words, traders targeting short-term contracts are unusually put-heavy.
On the other hand, data from the past 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows call buying has outpaced put buying by a 1.29 ratio. Some of this activity could have taken place at the now-expired October 170 call, however, since this contract saw one of the largest increases in open interest during the past two weeks.
It's also worth pointing out that while most analysts already have bullish recommendations on UNP, the stock's average 12-month price target of $180.20 sits right overhead -- suggesting some firms could soon be considering whether they should raise their price targets.