Could Nike Stock's Rally Run Higher After Earnings?

The stock just staged a bounce off several key technical levels

Digital Content Manager
Sep 23, 2021 at 3:47 PM
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The shares of Nike Inc (NYSE:NKE) are up 1% at $159.05 just ahead of the blue-chip company's fiscal first-quarter earnings report, which is due out after the close this evening. Nike is now headed for its third-straight daily pop, after staging a bounce off its 100-day moving average earlier this week.

nke chart sept 23

The recent rally back toward its Aug. 6 record peak of $174.38 really isn't much of a surprise. When we last covered Nike, the stock was coming off a incredibly well-received earnings call, which led to a bull gap above the previously untouched $150 level. In fact, the aforementioned 100-day moving average coincides with the stock's post-bull gap lows near this area, which could bode well for NKE after tonight's report. 

Looking back a bit further at post-earnings reactions, five of Nike stock's last eight next-day returns have been positive, and the stock has averaged a post-earnings swing of 6.9%, regardless of  direction. This time around, the options market is pricing in a slightly bigger move of 7.5%. 

These players are getting busy ahead of the company's quarterly event, with 59,000 calls and 29,000 puts across the tape so far, which is three times the intraday average. The most popular is the weekly 9/24 170-strike call, followed by the 165-strike call, and the 175 strike call in the same series. Positions are being opened at all three contracts, which are set to expire at the close this Friday. 

Options traders have been slightly more bearish than usual, however. While call volume still outweighs put volume overall, the stock's 50-day put/call volume ratio stands higher than 78% of annual readings at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This means puts are being picked up at a quicker-than-usual clip. 

Analysts, meanwhile, are overwhelmingly bullish. Of the 21 in coverage, only three say "hold," while 18 say "buy" or better. Plus, the 12-month consensus price target of $184.83 is a 16.2% premium to current levels. 

 

 

 

 

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