E-commerce logistics firm
GXO Logistics (GXO) has seen shares move in an uptrend over the past few months. One trader is betting that trend will play out over the next month.
That’s based on the May $55 calls. With 31 days until expiration, 4,528 contracts traded compared to a prior open interest of 108, for a 41-fold rise in volume on the trade. The buyer of the calls paid $1.53 to make the bullish bet.
GXO shares recently traded for about $52, so they’d need to rise by $3, or about 6 percent, in the next month for the option to move in-the-money. That’s still well under the stock’s 52-week high of $66 per share.
Revenues are up 9 percent for the company over the past year, but earnings are down as costs have risen. However, e-commerce and logistics trends have slowed but remain well above their pre-pandemic levels. That points to continued earnings power for GXO.
Action to take: Shares don’t pay a dividend, and are about in-line with the stock market’s average valuation at 22 times forward earnings. But that’s down from 54 times earnings last year. That makes shares a worthwhile buy at current prices or on a market dip.
For traders, the May calls play to the short-term uptrend in shares, which is likely to continue. The option can likely deliver mid-to-high double-digit returns in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
