By Patrick Martin / September 18, 2017 / www.schaeffersresearch.com /
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While earnings season has mostly wrapped up, package delivery giant FedEx Corporation (NYSE:FDX) will report its fiscal first-quarter results tomorrow night. FedEx has a history of making upward moves following its earnings reports. Below, we will take a look at how FedEx stock typically reacts after earnings, and how options traders are preparing for the big event.
At last check, FDX stock is up 0.3% today to trade at $215.38. Shares of the package delivery name have had a solid run, tacking on 35% year-over-year. The stock shot to a record high of $219.99 on July 10, and the shares' subsequent pullback was contained by the 80-day moving average.
Historically speaking, FDX stock has averaged a one-day move in either direction of 4.4% in the session following the firm's last eight earnings releases, per
Trade-Alert. The stock has reacted positively five times, including a 6.9% post-earnings pop at this time last year. Heading into FedEx earnings, the options market is pricing in a one-day swing of 5.5% for Wednesday's trading.
In the options pits, there has been an increased preference toward long puts over calls lately. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FDX sports a 10-day call/put volume ratio of 1.52, which ranks in the 90th percentile of its annual range.
Digging deeper, it appears the weekly 9/22 210-strike put was especially popular over this time frame, and it looks like new positions were purchased last Friday. This indicates traders expect the security to breach the strike price by expiration at this Friday's close. Regardless of where FDX stock settles the week, though, the most the
put buyers stand to lose is the initial premium paid.