Option Trade 
FedEx Corporation (NYSE:FDX) Calls 
Monday, 20th June, 2016

** OPTION TRADE: Buy the FDX OCT 2016 170.000 call at approximately $5.50. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $2.20.

by Ian Harvey

June 20, 2016

FedEx Corporation (NYSE: FDX), which provides a portfolio of transportation, e-commerce and business services under the FedEx brand, is scheduled to release its fiscal fourth-quarter results on June 21. The company will report after the market close, with the consensus calling for earnings of $3.26 per share. During the same period last year, the company earned $2.66 per share, and the stock is up 8.9% on the year.

Like peer United Parcel Service, Inc (NYSE:UPS), FedEx has managed to overcome a slowing global economy and stay on track with its full-year earnings expectations.

The express segment has been the standout performer for FedEx this fiscal year, with segment operating income up 40% in the first nine months.

The stock’s 50 day moving average is $162.41 and its 200 day moving average is $150.49. The stock has a market capitalization of $43.55 billion and a price-to-earnings ratio of 46.08. FedEx has a 52 week low of $119.71 and a 52 week high of $177.65.

Positive Input

Despite a weakening global economy and a slowdown in industrial production-- which negatively affects FedEx business-to-business (B2B) deliveries -- have seen the following beneficial trends:

• Weak B2B demand is being offset by a strong business-to-consumer (B2C) demand.

• Strengthening e-commerce demand is creating growth opportunities for both companies.

Zacks Group has stated FedEx Corporation to boast an affirmative Growth Style score as it offers higher growth prospects based on its strong financials.

Also, FedEx Co.’s stock had its “buy” rating restated by analysts at Cowen and Company in a report issued on Saturday.

Also, several other equities research analysts have recently commented on the company.

• Credit Suisse restated a “buy” rating on shares of FedEx in a research note on Thursday.

• Bank of America restated a “buy” rating on shares of FedEx in a research note on Thursday.

• Morgan Stanley restated a “hold” rating on shares of FedEx in a research note on Monday, June 6th.

• Oppenheimer restated a “buy” rating on shares of FedEx in a research note on Monday, June 6th.

• Finally, Zacks Investment Research raised FedEx from a “hold” rating to a “buy” rating and set a $184.00 price objective on the stock in a report on Thursday, June 2nd.

Ten research analysts have rated the stock with a hold rating, sixteen have issued a buy rating and one has given a strong buy rating to the company. The stock presently has a consensus rating of “Buy” and a consensus target price of $182.14.

Harvey’s Options Volatility Indicator

Conclusion

FedEx has been stuck in a sideways pattern since late March, when it shot higher on a solid fiscal third-quarter report. If the company is able to post another solid quarterly report, expect the stock to enjoy another nice rally.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the FDX OCT 2016 170.000 call at approximately $5.50. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $2.20.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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