Fed Ex credit spread

Brent Archer credit spread on Fed Ex

clipped from pg.bloggingstocks.com FedEx (FDX) lower on negative freight comments FedEx Corporation (NYSE: FDX) shares are falling this morning after a report released by Fitch Ratings signaled a gloomy outlook for freight transportation in 2008. Demand for railroad and trucking services will continue to decline in 2008, according to the report. For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $120 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. This particular trade, will make a 4.2% return in 4 months as long as FDX is below $120 at April expiration. FedEx would have to rise by more than 24% before we would start to lose money.