Expeditors International of Washington (NASDAQ: EXPD - option chain) stock is falling today after the company forecast second-quarter earnings of 24 cents to 26 cents a share, below analysts' projections of 30 cents per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on EXPD.This morning, EXPD opened at $28.94. So far today the stock has hit a low of $28.50 and a high of $30.15. As of 11:55, EXPD is trading at $29.95, down $1.71 (-5.4%). The chart for EXPD looks bullish and S&P gives EXPD a positive 4 STARS (out of 5) buy ranking`.
For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $40 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four months as long as EXPD is below $40 at November expiration. Expiditors would have to rise by more than 33% before we would start to lose money. Learn more about this type of trade here.
EXPD hasn't been above $37 since November and shown resistance around $34 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in EXPD.
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