FedEx Stock Pops on Consolidation Plans

Options traders are targeting FDX at triple the intraday average amount

Deputy Editor
Apr 5, 2023 at 10:53 AM
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The shares of FedEx Corp (NYSE:FDX) are up 3.2% at $233.68 at last glance, and trading at their highest levels since August, after the company announced its consolidation plans. FedEx is combining its separate delivery companies into one organization as part of its plan to cut $4 billion in permanent costs by the end of fiscal 2025, hoping to compete better with United Parcel Service (UPS) and Amazon.com (AMZN). 

Options traders are chiming in at triple the intraday average volume after the news. So far, 16,000 calls and 13,000 puts have been exchanged. The weekly 4/6 235-strike call is the most active, followed by the 240 call in the same series, with new positions being opened at both. 

On track for its eighth day of gains in the last nine, FDX is up 34.3% since the start of the year. The stock is nearing "overbought" territory, however, as per its 14-day relative strength index of 77.4, which typically indicates a short-term dip. 

Analysts are split on FedEx stock, with 12 of the 23 in coverage carrying a "strong buy" and 11 a "hold." The 12-month consensus price target of $239.81 is a slim 3.4% premium to current levels. 

Meanwhile, now looks like a good time to weigh in on the security with options. FDX's Schaeffer's Volatility Index (SVI) of 28% sits in the 11th percentile of its annual range, meaning options traders are pricing in low volatility expectations at the moment. 

 

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