New Plays, Saturday, 03/26/2005
New Option Plays
by OI Staff
HAVING TROUBLE PRINTING?
Call Options Plays
Put Options Plays
Fedex Corp - FDX - close: 93.89 chg: +0.02 stop: 96.01
FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $29 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 250,000 employees and contractors to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. (source: company press release)
Why We Like It:
Both FDX and the Dow Transportation index have been pillars of strength in this market for months. Yet in the last couple of weeks both have shown signs of weakness and both look poised for more weakness ahead. If you look at FDX's daily chart the stock has produced a possible double-top pattern near $101. The last three days has produced a breakdown below FDX's trendline of support dating back to May 2004. It is true that one could argue FDX is short-term oversold and due for a bounce but the action on the intraday chart suggests otherwise. Plus, its P&F chart is bearish with a $79 target. We are only suggesting short-term plays for a decline to the $90.00 level, which is round-number support that's also underpinned by its rising 200-dma. Our actual target will be the $90.25-90.50 range. We're going to use a stop loss at $96.01 but conservative traders might be able to get away with a tighter stop. Confirm market direction and the direction of the Transportation average before opening new positions.
We're expecting this to be a relatively quick play so we would prefer the April puts but the May puts would also work well.
BUY PUT APR 95.00 FDX-PS OI=2279 current ask $2.25
BUY PUT APR 90.00 FDX-PR OI=3229 current ask $0.45
BUY PUT MAY 95.00 FDX-QS OI= 80 current ask $3.30
BUY PUT MAY 90.00 FDX-QR OI= 309 current ask $1.25
Picked on March 27 at $ 93.89
Change since picked: - 0.00
Earnings Date 03/17/05 (confirmed)
Average Daily Volume = 1.8 million