FDX Analysis

Update 5/20/2015: FDX has neared maximum profit with less three trading days left before expiration. I've closed the position to eliminate the time risk.

Shares rose by 1.6% over two days, or a +294% annual rate. The options position produced a +83.9% yield on debit, for a +15,306% annual rate.

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The delivery service FedEx Corp. (FDX), headquartered in Memphis, Tennessee, broke above its 20-day price channel on Friday and confirmed the bull signal by continuing to trade above the channel on Monday.

The stock has high historical odds of bull signals producing winning trades, with an 80% success rate. In the past year it has completed five bull signals. Four were profitable, on average gaining 2.3% over 40 days. The one unsuccessful trade lost 5.6% over 10 days.

I shall use the MAY4 Weeklys series of options, which trades for the last time four days hence, on May 22.

[FDX in Wikipedia]

FDX

Ranges

The price today popped above the inner resistance level of $17.5.30

Click on chart to enlarge.

FDX at 10:15 a.m. New York time, 90 days 2-hour bars

Implied volatility stands at 18.6%, which is 1.4 times the VIX, a measure of volatility of the S&P 500 index. FDX’s volatility stands in the 55th percentile of its most recent rise.

Ranges implied by options and the chart

Week	SD1 68.2%	SD2 95%	Chart
Upper	179.04	182.47	175.30
Lower	172.20	168.77	163.60
Gain/loss	2.0%	3.9%

Implied volatility 1 and 2 standard deviations; chart support and resistance
The Trade

Bull put spread short the $175 puts and long the $172.5 calls,
sold for a credit and expiring May 23
Probability of expiring out-of-the-money

MAY4	Strike	OTM
	175	57.4%

The risk/reward ratio stands at 3:1. The premium is $0.62.

Decision for My Account

I've opened a bull position in FDX as described above.

-- Tim Bovee, Portland, Oregon, May 18, 2015

References

My volatility trading rules can be read here.


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Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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Based on a work at www.timbovee.com.