FedEx Corporation (NYSE: FDX) opened at $113.37. So far today the stock has hit a low of $112.588 and a high of $116.20. As of 10:40, FDX is trading at $115.0., up $4.19 (3.8%).After hitting a one-year high of $121.42 in February, the stock has been relatively flat just below $110 over the past three months. As Zac Bissonette noted earlier today, a report in Saturday's edition of Barron's mentioned FedEx as a potential takeover target, sending the stock higher on the rumors. We can take advantage of these rumors by placing a short-term moderately bullish trade. As long as there is a reasonable chance that FDX may be bought, the stock shouldn't drop by too much. Recent technical indicators for FDX have been bullish and steady, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $105 range. FDX hasn't been below $105 for more than a day or two since September and has shown support around $109 recently. This trade could be risky if oil prices (and fuel prices) continue to shoot upwards, but even if that happens, it looks like this stock could find support between $105 and $110. FDX is not scheduled to report earnings until September, well after this position's expiration.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls a position in FDX.
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Reader Comments (Page 1 of 1)
7-09-2007 @ 1:32PM
Don said...
Let's see. "Play and Rumors", sounds like some type of game, no? Now who could have started these "Rumors" and for what reason and who gains from them? Be specific please, no games.