Why Expeditors Can't Lose

03/12/2013 8:00 am EST


Andrew Keene

President and CEO, AlphaShark Trading

The only chance of this company moving in a negative direction is via direct competition undercutting it, says Andrew Keene on Minyanville, and he offers an options play below.

Expeditors International of Washington (EXPD) is engaged in the business of providing global logistics services. Moving averages for EXPD have been consistently up for awhile now. Respectively, the averages have been $38.13 in the last 200 days, $38.31 in the past 150 days, $39.15 in the past 100 days, $41.56 in the past 50 days, and $40.76 as of 20 days ago.

In the past quarter EXPD was estimated to earn $1.51 billion of revenue, and overachieved that with $1.53 billion of revenue. That being said, EXPD was up 2.1% on a year-over-year basis. Future reports for Expeditors International include an end-of-year average of $44.18, and earnings per sharing of $1.82.

As you can see, the moving averages (among other things) are certainly moving in a positive direction for Expeditors International. The likely reason for this is that day by day, the global market is expanding; in no time in the near future will there be less importing and exporting around the world. The only chance of EXPD moving in a negative direction is via direct competition undercutting it. The good news here is that a company such as Expeditors International actually has fewer competitors on a global scale then a company such as UPS (UPS) has on a national scale.

Right now, EXPD has 410 offices spread across six continents, leaving it with one of the most diverse customer spreads of any worldwide organization. One reason the company's customer base is likely to stay with it is because of its excellent customer service. On top of moving products from point A to B, Expeditors is unique in its operations in that it goes the extra mile to assist importers in clearing shipments through customs by preparing required documentation.

Paper bought 9,903 EXPD May 42.5 Calls for $.75. So, I want to jump on the bandwagon.

My Trade: Buying EXPD May 42.5 Calls for $.75
Risk: $75 per 1 lot
Reward: Unlimited
Breakeven: $43.35

Greeks of the Trade:

Delta: Long
Gamma: Long
Vega: Long
Theta: Short

By Andrew Keene, Contributor, Minyanville

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