Options Bulls Flock To Fedex Stock Ahead Of Earnings
Schaeffer's Investment Research | Mar 21, 2018 02:43AM ET
FedEx Corporation (NYSE:FDX) is all over the news today after a package exploded at the San Antonio 's implied volatility (IV) data.
Looking at the charts, FDX shares hit a record high of $274.56 on Jan. 18, before pulling back to their 120-day moving average. Since then, the stock's rally attempts have been contained by the $255 level -- an area that notably marked a post-earnings high back in December, and currently hosts the equity's 50-day moving average. At last check, the stock was up 1% to trade at $252.16, bringing its year-over-year gain north of 31%.
Analysts are in the bullish camp ahead of earnings. Exactly 85% of brokerages covering FDX rate it a "buy" or better, and the stock's average 12-month price target of $285 -- well north of the equity's January high -- represents expected upside of 13% to its current perch.
In the options pits, speculative players have bought to open calls over puts at a faster-than-usual pace ahead of FDX earnings. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day call/put volume ratio is 2.02, which registers in the 91st percentile of its annual range.
Digging deeper, the April 260 call has seen a notable increase in open interest during this time frame. ISE/CBOE/PHLX data shows significant buy-to-open activity at this strike, indicating options traders are banking on a breakout from FedEx stock in the coming month.
Meanwhile, short interest rose by 6.1% in the latest reporting period, but still only accounts for 1.6% of the stock's available float -- or a little less than three times FDX's average daily trading volume.
With the shares docked below recently stubborn resistance, and quite a bit of optimism already priced in by options traders and analysts, FedEx stock could struggle to find meaningful upside in the immediate wake of tonight's earnings report.
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