Union Pacific (UNP) PriceWatch Alert for August 25, 2009

Posted: Tuesday, August 25, 2009 8:28 AM EDT
By: Market Intelligence Center Staff

Union Pacific (NYSE: UNP) closed yesterday at $61.22. 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 59.93 and resistance in the 62.95 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 an Oct '09 60 covered call (UNP JL) for a net debit in the $57.42 area. That is also the break even stock price for this trade. This covered call has a 53 day duration, provides 6.21% downside protection and a 4.49% assigned return rate for a 30.94% 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 '11 30 Call (VUJ AF) and selling the Oct '09 60 call (UNP JL) for a $28.00 debit. The trade has a 53 day life and would provide 5.26% downside protection and a 7.14% assigned return rate for a 49.00% annualized return rate (for comparison purposes only). Union Pacific has a current annual dividend yield of 1.76%. [ATU-Seven Summits Research] For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo