FDX Sep 2015 Calendar

[Vancouver]

I'm in the 4-week P170 & P165 FDX calendar. Long Oct 16, short Sep 18. FDX reports on Sep 16 (not confirmed).

Entered both at $0.90-$0.92 during the past week.

This is VERY early, but I believe prices are attractive.

During the previous cycle, I had a similar trade. 4-week spread (180 strike), entered at $1.14, and prices went all the way up to $1.58 the day before earnings. (I sold at $1.40 or so).

Given these prices, I thought starting to build a positions around $0.90 is a good idea, although the stock can move, and IV isn't high.

So a 10 points move can do some damage, but at the same time spreads should increase in value.

Another nice surprise can be if earnings are pushed after Sep 18. 

 

[Edwin]

Would IV for Sept go up and the prices for Sept go up if Sept 16th earnings is confirmed, or do you think that's already priced into the Sep options that it's going to be on Sept 16th?  I don't see a big difference in Sept (21.67%) options pricing compared to Oct. (21.08%) in TOS.

[Yowster]

Vancouver - Excellent analysis, as usual.  Entry price is good but agree with your observation that FDX is not a high IV stock and as such the calendar will be less resilient to large stock price moves during pre-earnings compared to stock's whose options have higher IV.  For those who follow suit and open the trade now, just keep tabs on it and adjust by rolling to different strikes if the stock starts to move too much.

[Kim]

Earnings confirmed on Sep.16. The 170 spreads are wroth around 1.05 now, up 15% already.

[bam1960]

I closed 165P @1.18 for 28% gain

[Vancouver]

Although the trade is up a lot already, I plan to hold (at least part of it) a bit longer as we still have more than a month before earnings (Sep 16), and during the last cycle a similar spread traded as high as $1.58. We were lucky so far as the stock is still in the 165-170 range, and this can change quickly of course. I plan to sell between a third and a half of the position next week to lock in some gains.