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Nike Inc (NKE) would need to hit record levels by July expiration for this trader to profit
An upgrade to "overweight" from "neutral" at Piper Jaffray has Nike Inc (NYSE:NKE) 0.5% higher at $100.08. The price action has prompted a fresh wave of call buying, with heavy attention being paid to the July 105 call. Actually, much of the action here can be attributed to one trader, who bought to open 2,500 contracts for $2.03 apiece -- resulting in an initial cash outlay of $507,500 (number of contracts * premium paid * 100 shares per contract). By purchasing the options, this trader is betting on NKE to eclipse $105 -- territory never before seen -- by July expiration.
Don't put it past the equity to hit this mark, though. In the past year, NKE has gained roughly 37% -- and hit an all-time peak of $103.79 as recently as March 20. Also, the shares are now back atop their 20-day moving average, which has provided solid support since late February.
Even so, some analysts refuse to get behind the stock. There are currently 21 brokerage firms tracking the shares, and nine of them rate the security a tepid "hold." If NKE can sustain its long-term technical strength, it could benefit from a fresh round of upgrades.
Nike Inc (NYSE:NKE) could also see a boost should put-focused options traders flee the scene. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.81 reveals put open interest nearly doubles call open interest among options expiring in three months or less. Moreover, this ratio ranks in the 90th annual percentile, meaning short-term speculators are far more put-skewed than normal.