Expeditors International of Washington (NASDAQ:EXPD) is engaged in the business of providing global logistics services. The company offers its customers a seamless international network supporting the movement and strategic positioning of goods. Its services include the consolidation or forwarding of air and ocean freight. In each United States office and in many overseas offices, the company acts as a customs broker. It also provides additional services, including distribution management, vendor consolidation, cargo insurance, purchase order management and customized logistics information.
Here's a late entry that emerged as we were viewing a chart scan for "break-downs" and failed rallies. The technical indications portray a stock with substantial overhead supply near the sold (call) strike and ample potential for downside activity in the near-term. Traders who believe the freight sector will continue to consolidate in the coming weeks should consider this position.
Fundamentals Chart Earnings Dates Analyst Ratings
PLAY (conservative - bearish/credit spread):
BUY CALL MAY-60.00 URP-EL OI=212 ASK=$0.15
SELL CALL MAY-55.00 URP-EK OI=789 BID=$0.55
INITIAL "NET-CREDIT" TARGET = $0.45-$0.50
POTENTIAL PROFIT (X 5 contracts @ $0.45) = $225
MARGIN REQUIREMENT (X 5 contracts) = $2275
RETURN ON INVESTMENT (max) = 9.8%
COST BASIS = $55.45
INITIAL EXIT STRATEGY:
Once the position is open, traders should place a (contingent) order to close the short ($55.00) call options if the stock moves above $54.25. A "net-debit" order of $0.90-$0.95 to close the spread may also be appropriate for some portfolios. Future adjustments to this loss-limit/exit point will be posted in the MCM Newsletter.