Option Trade 
Nike Inc (NYSE:NKE) Calls 
Monday, 27th June, 2016

** OPTION TRADE: Buy the NKE OCT 2016 55.000 call at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

by Ian Harvey

June 27, 2016

Nike Inc (NYSE: NKE), a seller of athletic footwear and athletic apparel worldwide, will report its fiscal fourth-quarter numbers tomorrow, June 28. The company will post its quarterly results after the market close, with the consensus calling for earnings of $0.48 per share, down a penny from the same period last year.

After a very bullish multi-year run for NKE, shares have cooled off a bit in 2016, but the underlying fundamentals for the company remain very strong. The still strong “athleisure” fashion trend should continue to keep strength under the entire athletic sector, as evident by the recent solid quarterly report from Finish Line (FINL), which topped estimates for both the top and bottom line, and led to a sharp jump in FINL shares.

A big reason why NKE shares have underperformed in 2016 is the stock’s valuation. Even with the recent losses, the stock trades with a P/E of 24.6, but with earnings expected to rise 16.2% this year, and 14.4% next year, additional downside risk in the stock is limited at this time.

The stock is down 14.9% on the year.

Nike has a 50 day moving average of $55.71 and its 200 day moving average is $59.57. The company has a market cap of $89.29 billion and a PE ratio of 24.54. Nike has a 1-year low of $47.25 and a 1-year high of $68.19.

Nike Inc‘s stock had its “buy” rating reaffirmed by equities research analysts at B. Riley in a research note issued to investors last Wednesday. They presently have a $66.00 target price on the footwear maker’s stock. B. Riley’s target price points to a potential upside of 25.50% from the company’s previous close.

Also, several other equities research analysts have recently commented on the company.

• Vetr upgraded shares of Nike from a “buy” rating to a “strong-buy” rating and set a $62.64 price target on the stock in a research report on Monday, May 30th.

• Zacks Investment Research upgraded shares of Nike from a “hold” rating to a “buy” rating and set a $70.00 price target on the stock in a research report on Monday, February 29th.

• Jefferies Group reiterated a “buy” rating and issued a $74.00 price target on shares of Nike in a research note on Tuesday, March 29th.

• Brean Capital reiterated a “buy” rating on shares of Nike in a research note on Thursday, June 16th.

• Finally, Bank of America reiterated a “neutral” rating and issued a $60.00 price target on shares of Nike in a research note on Wednesday.

Three analysts have rated the stock with a sell rating, six have given a hold rating, twenty-five have given a buy rating and one has assigned a strong buy rating to the stock. Nike presently has a consensus rating of “Buy” and a consensus target price of $69.87.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the NKE OCT 2016 55.000 call at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



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