Nike Inc (NKE) Options Trader Puts $1.2M on the Line

Nike Inc (NKE) stock and options volume are running at a much faster-than-usual pace

by Alex Eppstein

Published on Aug 19, 2016 at 12:00 PM
Updated on Jun 24, 2020 at 10:16 AM

Nike Inc (NYSE:NKE) stock is hot, and so are its options pits. At last check, the shares had tacked on 3.1% at $58.98 -- making NKE the top gainer on the Dow -- after the athletic apparel expert agreed to a supply chain partnership with Apollo Global Management LLC (NYSE:APO).

Currently, Nike's intraday stock volume ranks in the 92nd percentile of its annual range, while calls are running just 1 percentage point from an annual peak. By the numbers, 34,000 calls are on the tape, tripling the 11,000 puts exchanged so far. Not to mention, the stock's single-day put/call volume ratio of 0.33 rests below 96% of all comparable readings from the past year.

Digging even deeper, NKE's most active option is the in-the-money August 57.50 call, where a 20,000-contract block may have been bought to open. If this is the case, the trader shelled out over $1.2 million ($0.63 premium paid * number of contracts * 100 shares per contract), anticipating more upside through tonight's close, when the front-month options expire.

Historically speaking, NKE options traders have been optimistic. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 2.55 calls for every put. What's more, this ratio rests in the bullishly skewed 92nd percentile of its annual range.

This glass-half-full perspective is echoed among analysts, as nearly two out of three rate NKE stock a "strong buy." Plus, short interest represents a small 1.4% of the equity's total float, and would take less than three sessions to cover, based on the shares' typical trading levels.

Whether or not Nike Inc (NYSE:NKE) has justified this optimism is another question altogether. To be sure, the stock has been hot since bottoming near $50 in late June -- continuing its trend of third-quarter outperformance. However, the shares are still sitting on a year-to-date deficit of nearly 6%, and could again encounter resistance at their overhead 60-week moving averagea trendline that blocked a breakout attempt last month.

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