🕒 Market Overview: Margins expanded 680 basis points despite declining revenue, proving automation delivers tangible ROI.

🔄 Sector Insight: Transportation valuations face recalibration as AI creates structural competitive moats in commoditized industries.

💰 Today's Trade Idea: Bull Call Spread on IYT captures transportation sector upside with defined risk exposure.

SMART TRADE IDEA

Bull Call Spread on IYT

Trade Setup:  Buy $72 Call / Sell $80 Call, March 20, 2026, expiration.

• Cost:  $2.75 ($275 per spread)

• Max Profit: $5.25 ($525 per spread)

• Breakeven:   $74.75

Management Plan:  Exit at 50% loss, roll up, or take profits if IYT’s price reaches $79 per share before March 20, 2026.

Automation is reducing costs, and many transportation and logistics companies will likely benefit from capital investments made over the past years. I expect the sector to follow CHRW, reporting improved EPS, which will lift the blended P/E ratio and send the IYT ETF to new all-time highs.

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

C.H. Robinson’s (CHRW) earnings were impressive, as the company beat EPS estimates. However, revenues came in below forecasts, suggesting that the company has successfully streamlined its operations. Technological automation is not just a CHRW strategy; it is a given for companies across all sectors.  Employment costs decline, reducing the cost of goods or services sold, increasing profit margins. While automation requires substantial capital investments, as CHRW earnings once again prove, the payoff can be substantial. CHRW’s P/E ratio has increased to over 25.5 times earnings, while the blended price-to-earnings ratio of the iShares Transportation Index ETF (IYT) is far lower at around the 18.5 times earnings level. While IYT has only a 2.5% exposure to CHRW, it is a diversified transportation ETF that owns shares in many companies whose bottom lines should improve from automation’s cost reductions.

IYT’s ten-year monthly chart highlights the bullish pattern of higher lows and higher highs since the 2020 pandemic-inspired low of $29.15. The most recent high was in November 2024 at $75.59. With a price of nearly $72 per share on October 31, the ETF’s path of least resistance remains higher, with new record peaks on the horizon over the coming months.

The March 20, 2026, IYT $72-$80 vertical bull call spread at $2.75 per spread or lower, has a risk-reward ratio of better than 1:1.9

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