FedEx Q2 Earnings Beat Estimates

Posted Mar 18th 2010 2:00PM by Brent Archer
Filed under: Earnings Reports, Forecasts, Good news, FedEx Corp (FDX), Options, Technical Analysis

FedEx (FDX - option chain) shares are rising slightly today after the company reported Q3 2010 earnings this morning before the market open. EPS of 0.76 beat analyst estimates of 0.72, plus the company provided an improved outlook, lifting its full-year earnings forecast. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on FDX.

FDX opened this morning at $87.85. So far today the stock has hit a low of $87.00 and a high of $90.39. As of 11:55, FDX is trading at $90.36 up 0.49 (0.6%). The chart for FDX looks bullish and S&P gives AGN its highest 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $70 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four months as long as FDX is above $70 at July expiration. FedEx would have to fall by more than 22% before we would start to lose money. Learn more about this type of trade here.

FDX has not been below $70 since September and has shown support around $85 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in FDX.

Tags: earnings, FDX, FedEx, forecast, inthenews, investors observer, InvestorsObserver, options