Nike Inc (NKE)

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Options Traders Rush Nike (NKE) Stock on Strong Earnings, Guidance
By: Schaeffer's Investment Research | December 21, 2022

• NKE drew at least 15 price-target hikes after its quarterly report

• Shares are trading at their highest level since June

Nike Inc (NYSE:NKE) shared better-than-expected fiscal second-quarter earnings and revenue after yesterday's close, and raised its revenue forecast to boot. The blue-chip athletic apparel name had one of its best quarters in terms of revenue growth in more than 10 years, as discounts and increased promotions to reduce excess inventory boosted results.

At last check, NKE is up 14.1% to trade at $117.77, as a round of post-earnings bull notes roll in. At least 15 analysts have hiked their price targets, including UBS to $146 from $141. Analysts are bullish on Nike stock, with 19 of the 27 in coverage rating it a "buy" or better.

Meanwhile, the options pits have been bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.29 stands higher than 97% of readings from the last 12 months. This suggests puts have been getting picked up at a quicker-than-usual pace, and that a shift in sentiment could push Nike stock even higher.

Options volume is today running at 17 times the usual amount, with 40,000 calls and 53,000 puts exchanged so far. The most popular contract is the 12/23 120-strike call, followed by the 110-strike put in the same weekly series, with positions now being opened at both.

That look like a solid route, per NKE's Schaeffer's Volatility Scorecard (SVS), which ranks at 85 out of 100. This means the security has exceeded option traders' volatility expectations during the past year.

Digging deeper, the shares yesterday snapped a four-day losing streak, despite still carrying a 28.9% year-to-date deficit. The security is today trading at its highest level since June, as it breaks through a long-term ceiling at the $16 regions, and surges back above the 20-day moving average.

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