Norfolk Southers 4Q earnings improved 31 percent from the prior year. Revenue increased from $7.8 billion to $9.52 billion. CEO Wick Moorman said in a statement the company has "every reason to believe that 2011 will be an even stronger year for us." Another person who has been bullish on railroads lately is Warren Buffett, as he spent $26 billion to acquire Burlington Northern back in November. 1 yr target estimate is $72.88.
Buy 100 NSC: (-$6,300)
Sell 1 NSC Jan 12 65 call 480
Sell 1 NSC Jan 12 60 put 540
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Net outlay: 5,280
Return: if >$65 Jan 12, return is $1,220 or 23% on a stock that only needs to go up 3.2% from current prices.
Risk: If stock is below 60 Jan 12, you will have to buy 100 shares at $60.
Break-even: 56.4
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