Dimitra DeFotis wrote a bullish piece on Expeditors International Washington (NASDAQ: EXPD) in this week’s Barron’s. It’s a transportation company (an industry where I had no exposure) and is a mid-cap company, another hole I needed to fill in my effort to stay better diversified. The analysts DeFotis sited think EXPD has huge potential. I just need it to level out for my new naked puts to work for me. I checked EXPD’s historic P/E ratios and see it’s currently trading on the lower end of that range. I tend to do better chasing companies that are closer to the lower end of their historic P/E ranges.
I charted EXPD to see if the chart agreed with the current price as a good entry point. It’s close. $31 looks like good support using previous lows for most of the past four or five months. Also, the trend line of higher lows since March 2009 (excluding the bottom of the intraday low on July 13th) shows strong support at today’s prices.
I based my limit order I entered last night on those two lines I drew, the $31(ish) horizontal line and the trend line of higher lows. While EXPD was trading at $31.80 (within a few cents of the low of the week so far) my limit order hit and I sold to open three EXPD October 30 naked puts (URPVF) at $1.00 each and received $287.75 after commissions. I could’ve waited for EXPD to dip down closer to the $31 area for my order, but feel I have cushion from here if I’m off a little. If DeFotis is right, I have little to worry about and can sit back and wait for time to erode the premiums I sold.