Burlington Northern (BNI) 11/6/09 PriceWatch Alert Technicals Showing Bullish

Posted: Friday, November 06, 2009 8:34 AM EDT
By: Market Intelligence Center Staff

Burlington Northern (NYSE: BNI) closed yesterday at $96.98. So far the stock has hit a 52-week low of $50.86 and 52-week high of $97.98. Burlington Northern stock has been showing support around 96.55 and resistance in the 97.67 range. Technical indicators for the stock are Bullish and S&P gives BNI a neutral 3 STAR (out of 5) hold rating. BNI appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Apr '10 95 covered call (BNI DS) for a net debit in the $92.68 area. That is also the break even stock price for this trade. This covered call has a 162 day duration, provides 4.43% downside protection and a 2.50% assigned return rate for a 5.64% 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 BNI Jan '11 80 Call (VNI AP) and selling the Apr '10 95 call (BNI DS) for a $14.05 debit. The trade has a 162 day life and would provide 3.02% downside protection and a 6.76% assigned return rate for a 15.00% annualized return rate (for comparison purposes only). Burlington Northern has a current annual dividend yield of 1.65%. [FBB-Seven Summits Research]