Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Traders,

We are delving into the maelstrom of Norfolk Southern Corp (Ticker: NSC) to see if anything has come from all of the bad press and the Department of Transportation coming down on the railroad.

I have to say looking at the combo of volatility and price action, there is a story here.

Let’s go see what it is.

Railroaded 

I think the big story here is the lack of realized volatility into the slide down.

It was almost as if the long slow slide was a foregone conclusion. Just steady selling into bad news.

Normally when companies run afoul of the government, the stocks just don’t do much because they’re like a hot potato no one wants to hold.NSC is in that area.  

What there is not is the higher vol spike that often accompanies such terrible news.

I think if anything I would go with put calendars into this low vol as the poor news and sentiment will keep the stock weak, but clearly not dropping off a cliff.

I’d use  the fact that the stock dropped with a lower realized vol as an indication the accident was tragic but not a company-killer.

Short-term with put calendars for the weakness now, but a longer-term call when NSC pays the bills and gets back to moving freight around. – AG