FedEx Corporation (FDX) has delivered performance to investors in 2013, with shares having risen over 48 percent year to date. FDX is trading in a 52-week range of $90.05-$140.97, with shares hitting the high of the year in Monday’s session.
The courier is scheduled to report fiscal Q2 Earnings before the opening bell of Wednesday’s session, with analysts estimating $1.64 earnings per share on total revenue of $11.43 Billion. The stock has moved an average of 3.9% percent the past 8 quarters, with shares rising 3 of the past 4 quarters and 5 of the past 8.
When setting up earnings trades, I always like to look at the movement projected by the options market through the near-term, at-the-money straddle. The FDX Dec 140 Straddle closed Monday’s session at $6.15, projecting a roughly 4.5% up or down before Friday expiration.
Some investors have raised concerns over rival UPS (up almost 34% YTD), and whether their agreement to make Sunday deliveries for Amazon will impact FedEx. FedEx is also considered to be something of a bellwether for the global economy, and given shares strong performance, it is possible shares have priced in strong growth for the coming year.
MY TRADE
Buy the FDX Dec 135-134 Put Spread for $0.25
Risk: $25 Per 1 Lot
Reward: $75 Per 1 Lot
Break-even: $134.75
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