Trade of the Day: Union Pacific (UNP)

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Today, we are opening a new bullish trade on Union Pacific (NYSE:UNP). Last week, UNP rallied off of yet another higher low at $130 in the consolidation range the stock has been in since late January as investors looked to the fundamental advantages that should continue pushing the stock higher during the next few months.

Thanks to many actions taken by the Trump administration, UNP is set to benefit from increased transportation demand as coal production increased, from tax savings and expedited tax write-offs from capital expenditures — UNP plans on investing heavily in Texas, Kansas and elsewhere — and from a general increase in transportation demand as the U.S. economy continues to grow.

We are looking for UNP to climb back up to resistance at $140 as the company approaches its earnings announcement on April 26, before market open. We also anticipate that implied volatility levels will rise as we get closer to earnings, which will benefit our long call position.

‘Buy to open’ the UNP May 140 Call (UNP180518C00140000) for a maximum price of $3.15.

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