Options Brief: Norfolk Southern (NSC)

NSC – Norfolk Southern Corp. – Bullish investors piled into call options on the provider of rail transportation services in the first half of the trading session despite the 1.60% decline in the price of the underlying shares to $52.20. Options traders enacting near-term optimistic stances on the stock perhaps took action today after Norfolk Southern Corp. was rated new ‘outperform’ with a 12-month target share price of $75.00 at Macquarie Research on Wednesday. Bulls purchased approximately 4,700 calls at the July $55 strike for an average premium of $1.14 per contract. Call buyers are poised to profit should Norfolk’s shares reverse course and rally 7.5% over the current price of $52.20 to surpass the average breakeven point to the upside at $56.14 ahead of July 16 expiration. Other options strategists wary of continued erosion in the price of the underlying shares scooped up 1,100 bearish puts at the July $50 strike for an average premium of $0.80 each. Investors long the puts make money if Norfolk’s shares tumble 5.75% lower to breach the effective breakeven price of $49.20 by July expiration. We note Norfolk’s shares have not traded below $49.20 since February 17, 2010. Options implied volatility on the stock jumped 10.6% to 44.64% by 11:25 am (ET).