FedEx (FDX) 12/4/09 PriceWatch Alert Shows Bullish Technicals

Posted: Friday, December 04, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

FedEx (NYSE: FDX) closed yesterday at $85.94. So far the stock has hit a 52-week low of $34.02 and 52-week high of $87.88. FedEx stock has been showing support around 84.43 and resistance in the 88.63 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 an Apr '10 80 covered call (FDX DP) for a net debit in the $75.64 area. That is also the break even stock price for this trade. This covered call has a 134 day duration, provides 11.99% downside protection and a 5.76% assigned return rate for a 15.70% 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 40 Call (VFX AH) and selling the Apr '10 80 call (FDX DP) for a $37.65 debit. The trade has a 134 day life and would provide 9.65% downside protection and a 6.24% assigned return rate for a 17.00% annualized return rate (for comparison purposes only). FedEx has a current annual dividend yield of 0.51%. [FBB-Seven Summits Research]