FedEx Corp. (NYSE: FDX) delivers "the world on time" to its customers and slow, steady growth – along with a $0.25 dividend – to its shareholders.
In fact, in 1983, it became the first American company to pull in more than $1 billion in revenue without any mergers or acquisitions, and it's been outperforming ever since.
FedEx makes a good, if expensive, foundational holding, but its $44 billion market cap, low volatility, and 282.3 million shares make it close to the last stock you'd ever expect to double your money quickly, let alone in less than three weeks.
But thanks to the easy, inexpensive trade I'm about to show you, that's exactly what happened.
Here's how we were able to turn a modest move up in FedEx shares into a 100% gain…
I Spotted This on My Money Calendar
I use my "Money Calendar" to zero in on trades that have a better than 90% chance of delivering triple-digit (or better) gains in the shortest possible time.
It's been a reliable way to take down gain after big gain, and back on Sept. 22, the Money Calendar was telling me it would be a really great idea to schedule some quality time with FedEx in late October.
And to get the most possible money out of this trade, a "loophole" was in order.
Technically, this is a bull call spread, and it's the way to go when you expect the stock to go higher but you don't want to leave yourself exposed to so much risk.
You simply buy call options at a specific strike price and then you sell the same number of call options at a different, higher strike price expiring the same month as the calls you bought.
So, on Sept. 22, I let my Money Calendar Alert members know what move we should make.
I recommended that my readers buy-to-open FDX Oct. 23, 2015, $150 calls (FDX151023C00150000).
Next, in the very same alert, I recommended they sell-to-open FDX Oct. 23, 2015, $155 calls (FDX151023C00155000).
As simple as that, we had our vertical call spread for $2.50 or less. Now, the "loophole" position was actually trading at $2.00 the morning of the entry date. So the exit on this trade would be to sell-to-close with an exit of $4.00, or a cool 100%…
The profits that came quickly afterwards were so fast, they shocked even me…
You see, I was only expecting FDX shares to mount a $6 or $7 run by Oct. 22, so the "exit strategy" I set up had my readers prepared to take profits with these instructions:
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.
I have traded options in the past but never knew the powerful protection this setup provides. My first trade and I pocketed $1950. Thank you, Tom. Looking forward to the rest of the year…
I still do not understand why Moneymorning is pushing long trades, while at the same time screaming about the 'Super Crash'.
Why is that? Thanks.
Please explain the term "loophole trade" and how it's different than a vertical spread. Thanks
I believe they are the same. It's his own descriptive terminology.
Thanks for an interesting example. However, there are errors in the trade description. Is this a fictitious trade or a real trade?
You bought to open $150 calls and sold to open $155 calls. Then you are buying to close $150 calls (if you are buying again you are doubling, not closing) and selling to close 145 calls (which you didn't have and so you are opening, not closing). What you meant to say was what you had already stated earlier as your closing trades. I was wondering how the errors could have crept in if it was a real trade.
I take your point that it is not worth waiting for more if the expected gain has been reached a little sooner. One should close the trade rather than risk losing some of the gain.
I didn't realize 100% gains could be obtained from spread trades. I wonder what conditions have to be met to get that sort of return.
Thanks again.