Nike Stock Earnings Reaction Catches Options Traders Off Guard

The sporting apparel stock received no fewer than seven price-target hikes after earnings

Managing Editor
Mar 23, 2018 at 9:47 AM
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Shares of Nike Inc (NYSE:NKE) are soaring, after the athletic apparel concern reported fiscal third-quarter adjusted earnings and revenue beats last night, and in response, received a fresh round of bullish brokerage notes. The most notable price-target hike came from Deutsche Bank to $76 from $75 -- an 18% premium to last night's close, and uncharted territory for the Dow stock. At last check, NKE was up 3.6% at $66.71 in early trading.

Nike stock has already had an impressive run up the charts -- gaining 32% since skimming the round $50 mark in mid-October, and more recently touching a fresh record high of $70.25 on Feb. 27. Plus, yesterday's broad market-related dip was quickly contained by NKE's rising 80-day moving average. 

Nevertheless, put buyers have been swarming the retail stock. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows NKE with a 10-day put/call volume ratio of 1.52, ranking in the 89th percentile of it annual range. This indicates that puts have been purchased over calls at a much faster-than-usual clip during the past two weeks.

Echoing this, NKE stock's Schaeffer's put/call open interest ratio (SOIR) of 1.30 ranks in the 79th percentile of its annual range, showing a heavier-than-normal put-skew among options expiring within three months. While some of this activity may be a result of shareholders hedging against any unexpected downside, a capitulation from some of the weaker bearish hands could translate into tailwinds for the shares.

 

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