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.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.