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FedEx (FDX) earnings preview and ways to play, neutral or bearish.
3 min read

FedEx (FDX) earnings preview and ways to play, neutral or bearish.

FedEx (FDX) earnings preview and ways to play, neutral or bearish.

  • Fedex (FDX) reports Q4 earnings today at the bell. Consensus estimates are EPS $1.42 on revenue of $16.31 bil.
  • The options market is pricing a 1 month expected move of about 9.5%. Much of that is priced into the next few days as this week's (expiring Thursday) expected move is ~6%

The Set-up

The Fedex charts looks similar to other stocks in 2020 with a high on the year in February near $165, a March low near $90 and now a recovery up to its current price of $138. FDX put in its all time high way back in 2018 near $275. So the stock is half of what it was trading a few years ago.

Here's the 3 month expected move for FDX via OptionsAi technology:

The 1 month expected move:

And isolating earnings, this week's:

Ways to Play:

FDX's last earnings came at the March 17 lows and after initially opening about 5% lower rallied, marked a bottom in the stock and never looked back.

Let's take a look at a couple of ways to play, starting with a neutral stance, isolating this earnings event and selling to both the bulls and the bears in a holiday shortened week:

As you can see the Iron Condor is an interesting trade. Here it is in detail:

This is about a 1 to 1 risk reward with short strikes set at the 131 and 147 level. It's a bet that FDX does not violate its expected move. Any close between 131 and 147 is max gain, and close below 130 or above 148 and it is a max loss. The other interesting thing about this trade is it's essentially putting a band around the recent highs and lows of the stock over the past month. The options market has a way of doing that.

Next let's look at a bullish stance, but with a longer time frame, out to August. Here are bullish trades based on the expected move on August 21st, via Options Ai technology:

This is a tough one on breakevens. The long 140/155 call spread doesn't breakeven until 145.44 in the stock and the recent highs in the stock were only to 150. The Short 140/120 put spread isn't obvious risk reward risking 13 to make 7, however, that breakeven puts it at about $133 in the stock with high probability. I'd look at it that way and I think it makes sense for those that would be a buyer in the stock anyway at those levels. That trade would make money even with the stock slightly lower, and it wouldn't matter how feeble a rally was from here because it would make max gain on any close above 140.

Previously:

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