FedEx (FDX) Selected To Investors Observer Hedged Dividend Income List

Posted: Monday, November 23, 2009 9:14 AM EDT

FedEx (NYSE: FDX) closed yesterday at $81.78. So far the stock has hit a 52-week low of $34.02 and 52-week high of $85.43. FedEx stock has been showing support around 79.66 and resistance in the 83.66 range. Technical indicators for the stock are Bullish and S&P gives FDX a positive 4 STAR (out of 5) buy rating. FDX appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jan '10 75 covered call (FDX AO) for a net debit in the $72.98 area. That is also the break even stock price for this trade. This covered call has a 54 day duration, provides 10.76% downside protection and a 2.77% assigned return rate for an 18.71% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the FDX Jan '11 30 Call (VFX AY) and selling the Jan '10 75 call (FDX AO) for a $43.10 debit. The trade has a 54 day life and would provide 10.61% downside protection and a 4.41% assigned return rate for a 30.00% annualized return rate (for comparison purposes only). FedEx has a current annual dividend yield of 0.53%. [ABR-Seven Summits Research]

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