Market Overview

Mike Khouw's Nike Trade Ahead Of Earnings

Share:
Mike Khouw's Nike Trade Ahead Of Earnings

On CNBC's "Options Action," Mike Khouw spoke about Nike Inc. (NYSE: NKE) ahead of earnings.

The Beaverton, Oregon-based company is going to report earnings Tuesday and it usually moves around 4.7% on the event. The options market is currently implying a move of 7% in either direction.

Khouw thinks Nike's valuation is high and the option premiums are elevated. He believes it would be a good idea to sell call options against the long stock position, going into earnings. Specifically, he would sell the October $120 call for $3.60. Choosing this strike, he has around $5 of potential upside and on top of that he gets $3.60 in premium.

Those who don't own the stock, should not sell naked calls, said Khouw. Instead, they should sell the October $120 call and buy the October $125 for a credit of $1.60. The premium is around a third of the distance between strikes.

Courtesy image

 

 

Related Articles (NKE)

View Comments and Join the Discussion!

Posted-In: CNBC Mike Khouw Options ActionEarnings News Options Markets Media Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com