didn't enter a trade today on Fedex and heres why. was watching the reaction to the earnings after hours yesterday and was hoping for a continued down move enough so i could possibly sell cash secured puts 30-45 days out below the low near 137ish. big selloffs are usually high probability trades since the volatility spikes temporarily (meaning the option price) and the natural price increase for the puts since its a down move. what i hope to see on stocks with this type of move is where you see the earnings results / conference call comments that appear to be positive.. weve all seen them where a company is growing 40+ % or whatever and some metric is slightly off or just misses the consensus number and it sells off. the fast money desk maybe talks it up that the earnings were good or going forward looks great. essentially the stock sells off on good news. LULU comes to mind from a few days ago.
i dont follow Fedex carefully outside of the passing references on cnbc but what seemed to be going on with Fedex was going down on bad news. earnings misses, outlook poor or unconvincing, and not positive commentary on fast money. had the selloff but was lacking the positive portion needed to enter into a put sale. although a put sale might work out with time decay, im looking for the volatility crush (price decreases as volatility drops) AND some upside movement. lastly remember my rule that if the trade doesnt feel right (gut check) , i pass. my gut overrides and technicals or targets. another rule i have is only sell cash secured puts on stocks im ok owning and given the current sentiment i would not want to own Fedex.
save the buying power for another trade elsewhere
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