Play UNP Calls

Plus, Maintain MOS

By Bryan Bottarelli
Thursday, December 06, 2007 11:16 AM EST
Thu, 6 Dec 2007 16:16:00 GMT

Dear Bottarelli Research Member,

Our favorite agriculture plays continue to post impressive gains. As I write, shares of

Potash of Saskatchewan (POT – NYSE) hit yet another new 52-week high at $131.39. And not to be outdone, shares of Mosaic (MOS — NYSE) have hit a new historic high at $77.47. As you know, I love seeing new historic highs, so continue holding your MOS December 75 Calls (MOS LO) for more upside.

MOS

Another stock hitting a fresh 52-week high is Union Pacific (UNP – NYSE). Compared to all of the other transport stocks, UNP has been the clear out-performer, and today’s new high signals further upside to come.

UNP

Best of all, when I looked at UNP’s December options string, the series looked quite cheap — especially for a $133 stock. In fact, the UNP December 130 Calls (UNP LF) are $1.50 in the money, yet they’re only trading for $3.90 per contract. That means you’re only paying $2.40 to carry this position, which is a great deal for an expensive company like UNP. As a point of reference, POT is a $130 stock as well, and their at-the-money December calls are trading above $6.00. So as a play on a new 52-week high combined with a cheap options string, I’d like to enter these UNP December calls now.

PLAY: Buy the UNP December 130 Calls (UNP LF) at or under $4.40, good for the day. Current bid/ask spread is $3.70 to $4.10. Place a protective stop limit at $2.20.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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