Nike Inc.: Lets’ Dunk Profits with NKE Options

We round up another interesting week of trading stock options today as we explore the options of Nike, Inc. (NYSE:NKE). I don’t think Nike needs an introduction since you have probably watch and played Basketball and you have heard about Michael Jordan. Nike with its market capitalization of $76.29B is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. Nike is a seller of athletic footwear and athletic apparel worldwide.

Why Are We Looking at Nike Today?

Nike reported its first quarter (Q1 2015) results after the bell yesterday to deliver an impressive quarterly performance beyond expectations. Highlights of the first quarter earnings are presented below:

  • The company reported revenue of $8B per share to mark a 15% improvement over the revenue from the same period last year and to beat the consensus estimate of $7.84B
  • Nike reported earnings of $1.09 per share to mark a 27% improvement over earnings from the same period last year and to beat the consensus estimate of $0.88 per share
  • Worldwide futures orders were up 11 percent and a  14 percent growth excluding currency changes was reported
  • Inventories as of August 31, 2014 was up 14 percent
  • The company reported growth in every product type, geography and key category, except Action Sports and Golf

Happy Investors Makes for Soaring Stocks

The chart above shows how shares of Nike have traded in the year-to-date period. You will observe that the chart is characterized with much sawtooth activity. Nonetheless, you will observe that the stock has gained 12.36%, with the most prominent gain in the share price occurring within yesterday and today.

Saying that traders and investors were impressed with Nike is an understatement, considering the fact that the stock surged more than 7% in after-hours trading yesterday. The bullish action continued today and more investors woke up to the impressive quarterly results. As at 9:49AM EDT, shares of Nike were trading up 10.48% to $88.11 after making a new 52-week high of $88.80.

Growth that Defies Expectations

Not many people could have imagined that Nike would grow to become a $70B company from the humble beginnings of Bill Bowerman and his University of Oregon runner Phil Knight days. In addition, not many people thought the company would continue growing after it became a $70B company; yet, the most recent gains in share price has silenced critics.

I am impressed with how Nike was able to fuel growth through its World Cup marketing efforts in which it supported popular brands such Ronaldo and Neymar. However, I am most impressed with the impressive growth the company has recorded across its largest geographies. The company reported a 12% growth in North America, a 25% growth in Western Europe and a 20% growth in Greater China.

How to Trade NKE Options

I strongly believe that Nike has started another bullish wave that options traders can safely ride to profitability. Quoting Mark Parker, President and CEO of NIKE, Inc. Fiscal year 2015 is off to a strong start. Our connection to consumers and ability to innovate, combined with our powerful global portfolio, is a complete offense…Nike has never been better positioned to realize our tremendous growth potential.”

I am confident that Nike will ride the current bullish wave to go above $90 and thus, I recommend the NKE Apr 2015 90.000 call (NKE150417C00090000) at an asking price of $4.10 or better.

— Daily Option Alerts

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