NKE stock is off to a hot start in 2017, but sentiment is still bearish
Nike stock took a sharp bounce near the round $50 level last November, even as
Barron's waxed pessimistic on the stock in early December -- saying "Bottom-fishers beware." While the stock got knocked lower in March by a negative earnings reaction, it found support at $54.50 -- site of its January highs. With this new floor put in place, a level that could be reinforced by the hefty amount of put open interest at the underfoot April and May 55 strikes, NKE stock seems set to add to its impressive 9% year-to-date gain.
There's ample cash sitting on the sidelines that could help fuel NKE's fire, too. Short interest has surged 60% year-to-date to 39.7 million shares -- the most since 2010. Should the stock continue to rise, a capitulation from some of the weaker bearish hands could translate into fresh tailwinds.
Plus, there's plenty of room for a round of bullish brokerage notes to draw buyers to NKE's table. Despite the stock's show of strength, half of those covering NKE maintain a "hold" or "sell" suggestion. Upgrades could boost the shares.
It's a prime time to purchase premium on NKE stock, too, considering its Schaeffer's Volatility Index (SVI) of 16% is docked at an annual low. Simply stated, historically low volatility expectations are being priced into NKE's options.
Subscribers to Schaeffer's Weekend Trader services received this commentary on April 16.