Thursday, September 17, 2009

Federal Express Blames Lower Oil Prices for Bad Results! Profit Opportunity

FDX, Federal Express reported dissapointing results today, with profit dropping 53%. What is realy interesting is that they blame lower gasoline prices. That's right, lower prices! The reason is that they were hedging their fuel. One wonders what will happen if oil and gasoline rise, will Fedex increase its profits? In what business is this company again?

One way to benefit fro the absurdity of this all is through straddles. Fedex can go up or down, as long as it moves a minimum amount an investor can profit.

Below are strangles for October and December. The maximum move required for October is around 10%. For January it is 18%.

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