Call Volume Pops as Nike Stock Hits All-Time High

The June 70 call is seeing heavy activity once again

by Josh Selway

Published on May 16, 2018 at 1:29 PM
Updated on May 16, 2018 at 1:29 PM

Nike Inc (NYSE:NKE) is seeing accelerated options activity today, as a big earnings move from Macy's (M) is providing a lift to the broader retail sector. Traders are mainly targeting calls, with more than 21,000 trading so far, nearly twice the number of puts. Looking at the most popular options, the June 70 call is in the lead, followed by the June 75, May 71, and June 72.50 calls. It's worth noting that the June 70 strike was already home to heavy open interest of 16,622 contracts coming into today, and the majority of those positions were bought to open.

In fact, call buying in general has been extremely popular on NKE in recent weeks. Take, for example, the 10-day call/put volume ratio of 1.99 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only does this reading show that long calls have basically doubled long puts in the past two weeks, but it registers in the 81st annual percentile, showing such a call-skew is highly unusual.

Anyone who's been targeting near-term options on the blue chip have enjoyed relatively low volatility premiums. That's judging by its Schaeffer's Volatility Index (SVI) of 21%, ranking in the low 27th annual percentile. And Nike has been good to premium buyers, based on its Schaeffer's Volatility Scorecard (SVS) of 79, showing a tendency for the stock to make moves bigger than the options market priced in during the past year.

Nike stock is actually the best performing Dow component today, up 2.7% at $71.39, and it earlier hit an all-time high of $71.51. The shares have seemingly made a definitive move above the $69-$70 area that had acted as a ceiling since February. Overall, the security is up 14% in 2018, and is pacing for a fourth straight up day, which would be its longest win streak since mid-December.

This technical outperformance has forced several brokerage firms to take a more positive outlook on the equity, especially after the company's impressive earnings release in late March. But the majority of analysts covering Nike still have "hold" or "sell" ratings in place, and the shares have surpassed the average 12-month price target of $71.14 -- so be on the lookout for more bullish attention in the form of upgrades and/or price-target hikes going forward.

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