FedEx Options Volume Runs Red-Hot During Slide

Most of the action is occurring on the put side

FedEx Corporation (NYSE:FDX) stock is spiraling this morning, after the shipping giant reported lower-than-expected fiscal first-quarter adjusted profit of $3.05 per share and revenue of $17.05 billion. FDX also cut its full-year profit forecast to a range of $11 to $13 per share, less than the consensus estimate, citing headwinds from the U.S.-China trade war, as well increasing competition from its former customer Amazon (AMZN).

Wall Street has been quick to chime in with a fresh round of bear notes. While Deutsche Bank joined at least three other brokerage firms in downgrading FDX stock to the equivalent of a "hold," J.P. Morgan Securities slashed its December 2020 price target for the second time this week, most recently to $146, and said it prefers rival UPS (UPS). At least seven other analysts cut their FDX price targets, too.

Against this backdrop, FDX stock is down 11.6% at $153.29, set for its biggest one-day decline since Dec. 19, when it plunged 12.2%. The shares had been rebounding off their late-August lows, but ran into resistance at their 200-day moving average in recent sessions. And thanks to today's drop, FedEx has erased its slim year-to-date lead.

With FedEx on the short-sale restricted list, options traders are in overdrive. Already today, around 29,000 puts and 25,000 calls have changed hands on FDX -- 22 times what's typically seen at this point, and volume pacing in the 100th annual percentile.

The September 150 put is most active, and it looks like new positions are being purchased here for a volume-weighted average price of $2.02. If this is the case, breakeven for the put buyers at this Friday's close, when the options expire, is $147.98 (strike less premium paid).