Back on January 22nd, when FedEx was trading below $310 per share, I entered a bullish call calendar spread in $FDX options. Shorted the March 350 calls and purchased an equal amount of July 250 calls to complete the spread. Net debit: $7.75.
My hope was that $FDX would slowly grind higher—but not quite reach $350 before the short March calls expired worthless. That was the sweet spot. The scenario where this calendar spread delivers its maximum value.
In the piece I published for All Star Options subscribers, I wrote: "[my analysts'] $430 price target feels a little aggressive to me. But I'm willing to make the bet that we can at least get the motor running in that direction."
Turns out my analysts may have been right to be aggressive.
FedEx absolutely took off after my entry. Not the slow, methodical grind I was hoping for. This stock ripped:
So I was wrong about the speed of the move. I underestimated how fast $FDX was going to run.
And yet—I still made money.
I was able to exit the entire spread for a $13.00 credit. That's a 67% profit on my invested capital. In nine trading days.
Annualize that.
This is the second time recently I've been wrong about a trade and still walked away profitable. The SLV put ratio spread was the other—bearish on silver while it went parabolic higher, yet the structure still allowed me to close for a gain:
Two trades. Two completely wrong directional calls. Two profits.
Options give us options. And they give us multiple ways to win.
Think about what happened with this FDX calendar spread. I was right about the direction—bullish. But I was wrong about the pace. I thought this would be a slow, steady climb. Instead it was a rocket.
A straight call buyer would have crushed it. They would have made significantly more than my 67% return.
But I wasn't positioned for a rocket. I was positioned for a grind. And the beautiful thing is, even being wrong about the speed, the calendar spread structure still delivered a strong profit because the stock moved favorably enough to make both legs of the spread work in my favor.
This is what I mean when I talk about options giving us flexibility that other instruments simply don't offer.
With stocks, you're either right or you're wrong. Right about direction, timing, everything. Miss on any of it and you're staring at losses or a mediocre return.
With options, you can be wrong about timing, wrong about the magnitude of the move, wrong about where the stock settles—and still profit because the structure of your trade accounts for multiple scenarios.
I'm not suggesting this happens every time. It doesn't. Plenty of trades go against me and I eat the loss. That's the game.
But these recent examples—SLV and now FDX—are beautiful reminders of why I love trading options. The flexibility. The creativity. The ability to construct positions that have multiple paths to profitability.
My analysts said $430. I thought that was too aggressive. I structured a trade that didn't need $430 to work.
The stock blew through my expectations. And I still won.
That's options for you. Sometimes the structure does the heavy lifting, even when your thesis doesn't play out exactly as planned.
Gotta love that.
Want to learn how to structure trades with multiple paths to profit? All Star Options delivers detailed trade plans that go beyond simple directional bets. Join us and discover the flexibility that makes options trading so powerful.
Sean McLaughlin | Chief Options Strategist, All Star Charts
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