Thinking about Riverbed, RVBD

Riverbed Technology, Inc (NASDAQ: RVBD) has a trading range that it can’t seem to break.  It might go as low as 28, but can be back at 35 in another month.  Last week they reported strong numbers and said first quarter sales tripled.  Since then it has retreated. 

I looked at the longer trend line and saw that there could be strong support IF it falls below 29 again.  I see 28 as a hard line for RVBD to fall below.  The June 30 put, nearly $2 OTM, right now offers a good premium at $1.05 and I might come back to take advantage of that price, but for now put a limit for two puts at $1.50 to see what luck might come my way on a brief fall RVBD might take.  I considered selling calls at the June 35 strike since it’s so far OTM and 35 seems to be a ceiling, but I like Riverbed longer term and can’t bring myself to push it there, yet.

I’ve written puts and covered calls on RVBD a couple of times already and that trading range always pays off given enough time, but this is a speculative play with a forward p/e of 46.76.  Analysts’ estimates range from 0.45 to 0.89 for next year which leaves a lot of room for some interesting activity.  That’s certainly a high p/e ratio, but on the other hand RVBD has been delivering the growth that makes that look reasonable.