DailyPlay – Opening Trade (NKE) – April 17, 2024

NKE Bullish Opening Trade Signal

Investment Rationale

Nike has underperformed the market and its sector since mid 2021. We have recently seen growth expectations from analysts have bottomed and started to recover. And as China’s growth starts to rebound, valuations near its historical lows, it is time for investors to start paying attention to Nike again as it trades near its multi-year lows. 

Technical Analysis

Nike has formed a triple bottom at the $90 support level over the past 3 years and recently it just bounced higher off this support. With a gap above at $100, our short-term upside target would be to fill that gap and $105 resistance level above that. 

NKE – Daily

Fundamental Analysis

NKE currently trades at the lower end of its historical valuation at 24x forward earnings, which is a 20% discount to its historical average and well below the 30-40x it traded for the previous few years. With growth expectations starting to recover on the back of China growth and Olympics this year, NKE is looking at a second half recovery of sales declines. 

Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 7 Contracts June 21st $92.50/$100 Call Vertical Spreads @ $2.99 Debit.

Total Risk: This trade has a max risk of $2,093 (7 Contracts x $299) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $299 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is in a bearish trend and bouncing higher off support.

1M/6M Trends: Neutral/ Bearish

Relative Strength: 3/10

OptionsPlay Score: 105

Stop Loss: @ $1.50 Credit. (50% loss of premium paid)

View NKE Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Wednesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View NKE Trade