Union Pacific (UNP) PriceWatch Alert With Support Around $45.34

Posted: Tuesday, May 26, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Union Pacific (NYSE: UNP) ended the last trading session at $46.16. So far the stock has hit a 52-week low of $33.28 and 52-week high of $85.80. Union Pacific stock has been showing support around 45.34 and resistance in the 47.48 range. Technical indicators for the stock are Bullish and S&P gives UNP a neutral 3 STAR (out of 5) hold rating. UNP appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at a Jul '09 45 covered call (UHP GI) for a net debit in the $42.46 area. That is also the break even stock price for this trade. This covered call has a 53 day duration, provides 8.02% downside protection and a 5.98% assigned return rate for a 41.20% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the UNP Jan '10 25 Call (WUJ AV) and selling the Jul '09 45 call (UHP GI) for a $17.80 debit. The trade has a 53 day life and would provide 7.28% downside protection and a 12.36% assigned return rate for an 85.00% annualized return rate (for comparison purposes only). Union Pacific has a current annual dividend yield of 2.23%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]