SteadyOptions is an options trading forum where you can find solutions from top options traders. Join Us!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

Post Earnings Trade in FedEx


We've looked at a lot of momentum trades, but for now, we will continue to look at non-directional trades. This is a slightly advanced option trade that starts two calendar days after FedEx Corporation (NYSE:FDX) earnings and lasts for the 19 calendar days to follow, that has been a winner for the last 2 years. 

FedEx has earnings due out on Tuesday 12-19-2017 after the market closes, according to our data provider Wall Street Horizon, and two days after that would be 12-21-2017 at the market close. 

FedEx Corporation (NYSE:FDX) Earnings 

For FedEx Corporation, irrespective of whether the earnings move was up or down, if we waited two full trading days after the stock move, and then sold a 3-week at out of the money iron condor (using weekly options closest to 21 days) at the close of trading of the second full day after earnings, the results were quite strong. This trade opens two calendar after earnings were announced to try to let the stock find equilibrium after the earnings announcement. 

We can test this approach without bias with a custom option back-test. Here is our earnings set-up: 

 

setup_2_21_earnings.png

 

Rules 
* Open the short iron condor two calendar days after earnings 
* Close the iron condor 21 calendar days after earnings 
* Use the options closest to 21 days from expiration (but at least 21-days). 

And a note before we see the results: This is a straight down the middle volatility bet -- this trade wins if the stock is not volatile the three weeks following earnings and it will stand to lose if the stock is volatile. 

RESULTS 
If we sold this 35/15 delta iron condor in FedEx Corporation (NYSE:FDX) over the last two-years but only held it after earnings we get these results: 
 

FDX: Short
35 Delta / 15 Delta 
Iron Condor
 
% Wins: 85.7%
 
Wins: 6   Losses: 1
 
% Return:  338% 


Tap Here to See the Back-test

We see a 338% return, testing this over the last 7 earnings dates in FedEx Corporation. That's a total of just 133 days (19 days for each earnings date, over 7 earnings dates). 

We can also see that this strategy hasn't been a winner all the time, rather it has won 6 times and lost 1 time, for a 86% win-rate. 

Setting Expectations 
While this strategy had an overall return of 34.9%, the trade details keep us in bounds with expectations: 
      ➡ The average percent return per trade was 37.2% over 19-days. 
      ➡ The average percent return per winning trade was 46.1% over 19-days. 
      ➡ The average percent return per losing trade was -16.5% over 19-days. 

WHAT HAPPENED 
Traders that have a plan guess less. This is how people profit from the option market. Take a reasonable idea or hypothesis, test it, and apply lessons learned. Sometimes that means using momentum or technical analysis. In this article, we examined non-directional positioning. 

Tap Here to See the Tools at Work 

Risk Disclosure 
You should read the Characteristics and Risks of Standardized Options

Past performance is not an indication of future results. 

 

Edited by Kim

What Is SteadyOptions?

Full Trading Plan

Complete Portfolio Approach

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Subscribe

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • Long Straddle Options Strategy: The Ultimate Guide

    A long straddle is an options spread that involves the simultaneous purchase of a put and a call at the same strike price and expiration date. It’s a long-options, market-neutral strategy with limited risk and unlimited profit potential.

    By Pat Crawley,

    • 0 comments
    • 326 views
  • Ready to Invest? Here's How to Get Started with Online Trading

    I am struggling with making the decision to get started.  How much money do I need to be efficient and effective following your instructions?  What software and where to find it?  I could really benefit from extra income but I am also in a position where I can't really afford to lose much so there is some doubt/fear.  But, your information and attitude felt right to me so I reached out.

    By Karl Domm,

    • 0 comments
    • 289 views
  • The Importance  of Proactive Hedging in Options Trading

    Investing in the stock market can be a daunting task for even the most experienced investors. With the constant fluctuations and volatility of the market, it can be difficult to predict the future direction of the market. This is where options trading comes into play.

    By Karl Domm,

    • 0 comments
    • 380 views
  • The Silent Bank Run

    Long before Silicon Valley Bank failed, the banking sector was experiencing a silent bank run. Unlike the Great Depression, where lines of people clamoring for their money were blocks long, this silent bank run, as its name portends, has been out of sight until recently. There are a couple of reasons for this. 

    By Michael Lebowitz,

    • 0 comments
    • 308 views
  • High Probability Strategy: A Holy Grail of Options Trading?

    A lot of options traders consider a 90% probability strategy a Holy Grail of trading. After all, if you can win 90% of the time, you should be able to grow your account very quickly, right? Well, not only this is not necessarily true, but in fact, a Winning Ratio alone tells you nothing about your chances to be profitable.

    By Kim,

    • 0 comments
    • 321 views
  • The 10 Best Options Trading Books

    Options trading can be challenging. I look at it as a journey, a long term investment, which is no different that graduating from University. And like University, you need to do a lot of reading, along with a lot of practicing. Fortunately, there are a lot of books out there that can be of tremendous help in this journey.

    By Kim,

    • 0 comments
    • 436 views
  • OptionNET Explorer (ONE) Software

    OptionNET Explorer (ONE) is a complete options trading and analysis software platform that enables the user to backtest complex options trading strategies, analyze their results and monitor them in real-time, all from within a single, user friendly environment. 

    By Kim,

    • 0 comments
    • 422 views
  • Delta Hedging Your Options Strategies

    All traders begin with an introduction to call and put options.  However, it's rare (apart from short puts) that an experienced trader would use these contracts by themselves. Instead, we primarily trade options spreads. There are many benefits to spreads. The variety of spreads are targeted to various market criteria and market environments.

    By Drew Hilleshiem,

    • 0 comments
    • 9,296 views
  • What Happened to SFO Magazine (SFOMag)? Stocks, Options and Futures Magazine

    Remember SFO Magazine? Traders like Jack Schwager and Brett Steenbarger used to write for the publication before its swift shutdown in 2012. What happened. SFO (Stocks, Futures, and Options) magazine was a monthly financial magazine focused on trading and investing in stocks, futures, and options markets.

    By Pat Crawley,

    • 0 comments
    • 1,317 views
  • How to Use the Finest Covered Call Strategy

    Investing in the stock market can be a great way to grow your wealth over time. However, it can also be a volatile and unpredictable place, with sudden swings in stock prices causing anxiety for even the most experienced investors. This is where the covered call strategy comes in - a popular options trading strategy that can help manage portfolio volatility.

    By Kim,

    • 0 comments
    • 947 views

  Report Article

We want to hear from you!


There are no comments to display.



Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account. It's easy and free!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now

Options Trading Blogs Expertido