Earnings Preview: Nike Inc (NKE)

Nike Inc (NKE) option players are eyeing the $50 level ahead of earnings

Dec 19, 2016 at 11:53 AM
facebook X logo linkedin


Nike Inc (NYSE:NKE) is having a rough year on the charts, and the athletic apparel retailer is due to report earnings tomorrow. Ahead of the event, option traders are eyeing the round $50 level for the shares of the worst-performing Dow component of 2016.

NKE is down 0.4% at $50.71 today, bringing its year-to-date loss to 18.9% -- the worst among all blue chips by a landslide. Currently, The Coca-Cola Co (NYSE:KO) is the only other Dow stock on pace for a year-to-date loss. However, NKE may have found a foothold at the round $50 region -- representing a 20% year-to-date decline for NKE shares -- which has acted as support over the last two months. 

Today in NKE's option pits, puts are trading at at twice their average intraday rate, with about 12,400 contracts exchanged -- on pace for the 91st percentile of its annual range. Drilling down, the January 2017 50-strike put is among the most active, and is already NKE's top open interest position, with more than 32,000 contracts outstanding. What's more, the January 2017 and weekly 12/23 50-strike put options have seen the most open interest added over the past two weeks. This heavy put activity and open interest located at the $50 level could act as an added layer of options-related support in the short term.

Against this backdrop, NKE's Schaeffer's put/call open interest ratio (SOIR) of 1.21 sits in the elevated 92nd percentile of its annual range, indicating near-term NKE option players have been especially put-skewed as of late. In addition, five of NKE's top 10 open interest positions are front-month puts.

Looking ahead at tomorrow's earnings report, NKE option players are pricing in a single-session swing of 7% in either direction. Over the past eight quarters, NKE shares have averaged a one-day post-earnings move of 4.1%, finishing in the red about half the time, so it looks like recent option players are betting on a bigger-than-usual earnings reaction out of the shares. If option traders' predictions pan out, a 7% fall could put Nike Inc (NYSE:NKE) well below the layers of support at the $50 mark, and in territory not charted since early 2015.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI