Bear Call Spread Ideas for FedEx Earnings

Core Insights - The article discusses the bear call spread strategy, which involves selling one call option and buying another to limit risk while profiting from a bearish outlook on a stock [1][2]. Group 1: Bear Call Spread Mechanics - A bear call spread is a vertical spread where two options with the same expiry month are traded, generating a credit for the trader [1]. - The sold call option is closer to the stock price than the bought call, and the strategy performs best when the stock declines [2]. - This strategy can also yield profits if the stock remains flat or rises slightly, and it is suitable for retirement accounts due to its defined risk [2]. Group 2: FedEx (FDX) Specifics - FedEx (FDX) has a high implied volatility percentile of 90% ahead of its earnings announcement on September 18th, making it a candidate for a bear call spread [3]. - The proposed bear call spread for FDX involves selling the $250-strike call and buying the $260-strike call, with a potential credit of $1.85, leading to a maximum risk of $815 and a profit potential of 22.70% [4][5]. - The breakeven price for this trade is $251.85, which is 9.71% above the current stock price [4]. Group 3: Alternative Bear Call Spread - An alternative bear call spread involves selling the $230-strike call and buying the $250-strike call, with a potential credit of $7.20, resulting in a maximum risk of $1,280 and a profit potential of 56.25% [8]. - This alternative strategy has a higher loss probability of 40.4% compared to the previous spread [8]. Group 4: Technical Opinion - The Barchart Technical Opinion rating for FDX is a 32% Sell, indicating a weak short-term outlook for maintaining the current direction [7].