Options Hot on New Apple Partner Nike Inc (NKE)

Nike Inc (NYSE:NKE) is partnering with Apple Inc. (NASDAQ:AAPL) on the Apple Watch, and NKE options volume is accelerated

Sep 7, 2016 at 3:11 PM
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Athletic apparel issue Nike Inc (NYSE:NKE) popped higher this afternoon, on news of a partnership with Apple Inc. (NASDAQ:AAPL). The duo are teaming up for the new Apple Watch, and NKE shares are up 0.6% at $57.74 -- a session high -- in response. What's more, NKE options are trading at a faster-than-usual clip, as speculators roll the dice on the stock's short-term trajectory.

NKE put options are crossing the tape at twice the average intraday pace, though much of that volume is attributable to action that transpired ahead of the AAPL announcement. Specifically, it looks like traders this morning bought to open October 55 puts, which will move into the money if NKE breaches $55 before options expiration on Friday, Oct. 20 -- which encompasses Nike's next earnings release on Sept. 27.

Since the AAPL announcement, the stock's weekly 9/9 58-strike calls have grown popular, with more than 2,400 contracts traded on open interest of fewer than 221. Buyers of the calls expect NKE to extend today's uptrend and topple $58 before the close on Friday, when the weekly contracts expire.

More broadly speaking, call buying has been a popular strategy in NKE's options pits of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NKE has racked up a 10-day call/put volume ratio of 1.65 -- higher than 74% of all other readings from the past year. In other words, options buyers have initiated bullish bets over bearish at a faster-than-usual rate during the past two weeks.

Nike Inc (NYSE:NKE) has rebounded 12.2% off its late-June low of $51.47, but is now staring up at its 50-week moving average. This trendline helped usher NKE to a record high in late December, but could now translate into a speed bump. However, if history is any indicator, NKE will extend its third-quarter run higher.

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