Sell the Train, Buy the Plane? Put volume is picking up in Union Pacific (UNP, news, chart) as railroad stocks come down hard off the day’s best levels of the trading session. UNP traded to a new 52-week high of $85.80 early, but was recently trading down $2.42 to $81.48. Volume in the options market is running double the usual, with 21,000 UNP puts and 3,600 calls trading on the day. The November 80 puts are the most actives, with 12,900 contracts traded and open interest of 1,825. Just before 1 pm we saw an impressive burst of put buying, when a sweep-router was used to pay $4.80 for more than 7800 November 80 puts. The net impact of this trade was more than 300,000 shares to sell, and knocked the stock down more than 60cents in an instant.

It appears that some players are initiating new put purchases on concerns about additional losses in UNP. There is no news on the stock today. However, other railroad stocks including Norfolk (NSC), Burlington Northern (BNI), and CSX (CSX) have also given up early gains and moved into the red. It comes as crude oil falls (6.01 to $109.44) and perhaps motivates some equity market flow to rotate out of the railroads and into the airliners.