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Tone turns bearish as FedEx struggles

By optionMONSTER,  April 11, 2012, 01:41:21 PM EDT

FedEx is struggling, and traders are nervous.

optionMONSTER's Depth Charge tracking program detected the purchase of 4,000 October 70 puts for $1.86 and the sale of an equal number of October 60 puts for $0.72. Volume was more than 7 times open interest at both strikes.

Known as a bearish put spread , the trade cost $1.14 and will earn a maximum profit of 777 percent if the shipping stock closes at or below $60 on expiration. It hasn't seen that level since mid-2009.

FDX is up 1.65 percent to $88.06 in afternoon trading but has been trending downward since mid-February. It's been making lower lows and lower highs and has yet to recover from a sharp drop after its last earnings report on March 22. The stock is also below its 100-day moving average for the first time this year, which some chart watchers may consider a bearish sign.

Overall option volume in FDX is slightly above average so far today, with puts outnumbering calls by a bearish 3-to-1 ratio.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Options

Referenced Stocks: FDX



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