FedEx has been climbing all month, returning exponential gains for upside option traders.
On May 4, Investitute’s proprietary programs identified the purchase of 5,000 July $200 calls bought mostly for $3.25 to $3.35 with shares at $190.93. Volume was above the strike’s open interest of 4,686 contracts, indicating that this was fresh buying.
Those calls traded for $17.50 this morning, representing a profit of more than 400 percent. The stock was up 13.6 percent in the same period, highlighting the kind of leverage that can be obtained through options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
FDX rose 1.32 percent today to close at $217.15. The global delivery giant beat earnings and revenue estimates in the post-market on June 20.