Bearish Options Traders Take Aim at Nike Inc (NKE)

Bearish options traders are gravitating toward Nike Inc (NYSE:NKE)​, as the stock continues to struggle

May 20, 2016 at 11:22 AM
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Bearish options traders are pounding Dow stock Nike Inc (NYSE:NKE)​, as the shares struggle following disappointing first-quarter sales from fellow retailer Foot Locker, Inc. (NYSE:FL). NKE put volume is running at three times the average intraday pace, putting it in the 98th annual percentile. The most popular option is the weekly 5/27 55-strike put, which options traders are buying to open in hopes of NKE breaching $55 before expiration next Friday night. The in-the-money May 57 put is also popular, as eleventh-hour traders place bets before front-month options expire at today's close. 

Option bears have had their eyes on NKE for the past two weeks. The stock's 10-day put/call volume ratio of 1.38 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 85th annual percentile. Said differently, long NKE puts have been targeted over calls at a faster-than-usual pace.

In fact, NKE's weekly 6/10 55-strike put has added more open interest than any other option over the past two weeks, with the 55-strike put also seeing heavy attention in the soon-to-be front-month June series. Data confirms substantial buy-to-open activity at the latter option, meaning traders have been betting on NKE to fall below $55 over the next month. 

As we noted last month, short sellers have taken an interest in the stock recently, with short interest jumping over 30% in the two most recent reporting periods. However, NKE still stands in good favor with the brokerage bunch, as 19 of the 26 covering analysts rating it a "strong buy." 

Before this year, betting against Nike Inc (NYSE:NKE)​ would have seemed absurd. The stock had been on a multi-year uptrend, hitting a record high of $68.20 last December. However, NKE has been moving lower since its earnings slip-up in March, and is now down over 9% in 2016 -- including a 0.8% loss today -- to trade at $56.57. Moreover, NKE is threatening to close below its 80-week moving average for the first time since late 2012. 

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