Like yesterday, I don’t know what reminded me to give Burlington Northern Santa Fe Corp (BNI) another look. I don’t see it in my notes and seem to remember coming across it on my spreadsheet I use to track potential returns. I’ve traded on it before and on Sunday, June 1st, I entered a limit order to try it again. Everything changed for the chart today though. BNI gapped down below yesterday’s low at the open and went straight down after that coming very close to the 50 day moving average before finding some footing. The low from this morning also coincides with the longer trend line of higher lows that started in January of this year, nearly six months ago.
BNI has followed a strong trend line of higher lows since April and also used the 20 day moving average as support a few times. The 10 day moving average was weaker, but still showed a little guidance for the stock’s continued climb up. BNI had a hard time getting up and over the $100 mark, but once it did that same ceiling became a floor. I expect the 50 day moving average to hold support and if it does not, I think 100 will be another point of support for it.
While BNI was trading at 107.61, I sold one BNI July 105 naked put (BNISA) and received $339.25 after commissions. BNI went as low as 104.58 this morning before starting to recover. My option, BNISA, traded as high as 4.80, clearly showing I chose the wrong price for my limit order from 11 days ago. At least I wasn’t anxious back then. I could be sitting on a much bigger paper loss. BNI is still trading out of the money for me, but if I had it to do over, I’d have sold the July 100 puts instead. I’d make less, but would have a deeper cushion to work with. The 100 strike July puts are trading around $2.50 for anyone who thinks the worst is over for this fall. Worth a few extra cents, BNI pays a dividend yielding around 1.1%. It’s nothing to write home about, but I’ll take it if my naked put is assigned and I end up writing covered calls on it.