FedEx Stock Tests Fibonacci Level Ahead of Earnings

Options traders have possibly been buying to open September 250 calls

Sep 14, 2018 at 12:53 PM
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FedEx Corporation (NYSE:FDX) is slated to report fiscal first-quarter earnings after the market closes Monday, Sept. 17. The delivery stock has been relatively quiet in the month leading up to earnings, based on its 30-day historical volatility of 15.3%, which ranks in the 22nd annual percentile. However, options traders are anticipating a bigger-than-usual post-earnings swing for FDX stock.

At last check, data from Trade-Alert showed the implied daily earnings move at 3.6% for FDX, higher than the average post-earnings next-day swing of 2.9% over the past two years. These earnings reactions have been mixed, though the two most recent were to the downside. Of those eight results, meanwhile, just two were large enough to exceed the percentage move expected in Tuesday's trading -- a 3.5% pop last December, and a 6.9% surge in September 2016.

Looking at specific options activity, it appears a number of traders have positioned for a post-earnings move higher. FedEx's September 250 call is home to peak open interest of 2,649 contracts. Data from Trade-Alert points to likely buy-to-open activity here in recent weeks, in part due to what appears to be a bullish roll up and out from the weekly 8/31 247.50-strike call back on Aug. 27.

This optimism is seen outside of the options pits, too. Of the 19 analysts covering FDX stock, 17 maintain a "buy" or better rating, with not one "sell" on the books. Plus, the average 12-month price target of $286.44 is a healthy 12% premium to current trading levels.

Looking at the charts, FedEx stock has been recovering since tumbling to a year-to-date low of $222.44 in late June, a milestone hit amid Amazon headwinds. FDX was last seen up 0.6% to trade at $254.71, but while the shares have recently reclaimed a foothold north of their year-to-date breakeven mark, they are now testing potential resistance near $256.25. This marks a 61.8% Fibonacci retracement of their first-quarter plunge, and served as a ceiling from March to May.

fedex stock chart on sept 14

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