Nike Earnings plan

I frequently plan for – and execute – trades that are designed to take advantage of a big price move at Earnings (the “catalyst”). Although most of the time I do trades near the event – prior day or day of – there are times where I want to plan for a run-up into Earnings. Here’s why:

1) Options are cheaper weeks before the event (IT has not ramped yet)

2) If you do get an UP move in price – and have a Bullish biased trade on – you get the benefit of price appreciation AND IV inflating

I have elected to take this approach with Nike as it reports on March 26. I will be using March 27 weekly Options:



Part of my preparation process is to look at available consensus data for EPS. I use Estimize as one such data-set:



The EPS graph above is a perspective that I use (I added the Asc Triangle myself) to help determine if there are any patterns. Next I review a Daily chart:



Now on to a few Trade Ideas:

Long the March 27 weekly 92/95/85 Risk Reversal Call Spread (RRCS). This trade should cost a $.25 debit. This trade takes margin (until the Short Puts are closed at least)

Long the March 27 weekly 92/95/97 Lopsided Call Fly. Wait to Short the Puts until you have a more solid floor (and I would likely use a nearer dated expiration too). This trade should cost a $.75 debit for the initial Call Fly



 – DM 12:35 PM CST


One thought on “Nike Earnings plan

  1. I guess at Earnings we will find out just how well $NKE has been hedging their FX exposure.

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