FedEx Corp. (FDX)
Update 3/22/2017: FDX rose slightly and implied volatility declined sharply on the first trading day after earnings were published, bringing the options above my target of 25% of maximum potential profit. I exited.
Shares rose by 0.05% over one day, or a 19% annual rate. The options position produced a 27.9% yield on debit for a +10,192% annual rate
FDX publishes earnings on Tuesday after the closing bell.
I shall use the APR series of options, which trades for the last time 31 days hence, on April 21.
Implied volatility stands at 28%, which is 2.3 times the VIX, a measure of the volatility of the S&P 500 index.
FEX’s IV stands in the 73rd percentile of its annual range and the 91st percentile of its most recent broad movement.
The price used for analysis was $193.50.
|FDX – iron fly||Strike||Odds||Delta|
The premium is 56% of the width of the position’s wings.
The risk/reward ratio is 1:1.
Decision for My Account
I have entered a position on FDX as described above. The stock at the time of entry was priced at $9.85.
By Tim Bovee, Portland, Oregon, March 21, 2017