This Shipping Stock Could Bounce Into Black Friday

FedEx stock tends to outperform in the month of November

Oct 31, 2018 at 11:43 AM
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The shares of FedEx Corporation (NYSE:FDX) have given up more than 8% in October, retreating in step with the broader stock market. However, the shipping stock is on the mend today -- and it could be the start of a longer rebound for FDX, if past is prologue.

FedEx stock was last seen 2.2% higher at $221.38, attempting to topple its 20-day moving average for the first time since Sept. 17, prior to a quarterly earnings miss. What's more, the security is set to snap a six-week losing streak -- its longest in at least 10 years.

FDX stock chart oct 31

This could be the beginning of FDX's recovery, if the equity can ride seasonal tailwinds again this year. Specifically, FedEx has been among the best stocks to own in November over the past 10 years, with the shares ending the month higher 90% of the time, and averaging a gain of 5.34%, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

It appears recent options buyers are speculating on a bounce for FDX. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly three FedEx calls for every put in the past two weeks. The stock's 10-day call/put volume ratio of 2.81 is in the 98th percentile of its annual range, meaning buyers have rarely shown a greater appetite for bullish bets over bearish during the past year.

The overhead November 230 call has seen a notable influx of open interest during this time frame, with nearly 5,000 contracts opened. This strike is now home to peak open interest in the November series. Data indicates a healthy portion of the recent calls were purchased to open, suggesting the speculators expect FDX stock to topple $230 by the close on Friday, Nov. 16, when the front-month options expire.


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