Traders are looking for Norfolk Southern to steam ahead in coming months.
The NSC September 77.50 calls were bought for $1.90 yesterday, along with some July 77.50s snapped up for $0.15. optionMONSTER's Heat Seeker system showed that the volume was heavily skewed to the upside, with 9,200 calls traded against fewer than 3,000 puts.
Those long calls lock in the price where shares can be purchased, which could provide significant leverage to a rally. Investors use these options to obtain long exposure cheaply and to limit losses in case they get the direction wrong. (See our Education section)
NSC rose 0.7 percent to $76.16 yesterday. A recent piece by Buckingham Research was bullish on the railroad operator, and rival CSX beat earnings estimates after the closing bell. NSC follows with its own quarterly report next Tuesday, July 23.
More than 12,000 contracts traded in the name yesterday, roughly 7 times its average amount.
Disclosure: I own NSC calls.
(A version of this post appeared on InsideOptions Pro yesterday.)
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