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NKE

TRADE IDEA: NKE APRIL 1ST 60/70 SHORT STRANGLEHere are the metrics for the setup: Probability of Profit: 73% Max Profit: $100/contract Buying Power Effect/Risk: $846/contract; Undefined Risk Break Evens: 59/71 Alternative: April 15th 56.5/60/69/72.5 iron condor Probability of Profit: 61% Max Profit: $100/contract Buying Power Effect/Risk: $250/contract; Defined Risk Break Evens: 59/70 Notes: As you can see, there are pros and cons to the short strangle versus the iron condor. The short strangle has a higher probability of profit, but requires more buying power and the risk is undefined. The iron condor has a fairly nice defined risk buying power metric of $250/contract, but the probability of profit is less (and I had to go farther out in time in order to get decent long options; the longs in the April 1st expiration at basically the same strikes were "no bid" on one side or the other ... ). The break evens of both setups are nearly identical, however.
NYSE:NKE
by NaughtyPines
WHAT I'M LOOKING AT FOR THIS COMING WEEKWith the VIX at sub-15 levels, premium selling plays are hard to come by, so I can either resort to low volatility strategies (calendars, diagonals), look to go "long volatility," or search for "diamonds in the ruff" for premium selling. Since I not a rabid low vol strategy player, I'm going to look at seeking out what limited short volatility plays there are or go long volatility, assuming an ideal setup presents itself. Currently, the sole individual underlying that I would sell premium in and that is not an earnings play is EWZ, since it still has an implied volatility rank of +70. Naturally, there are other underlyings with +70 implied vol rank, but they're just too low in price to get significant premium out of (e.g., PBR, which has a rank of 84). Unfortunately, I already have a play on in EWZ and don't like doubling up on plays just because there's nothing else out there. However, there are a couple of earnings announcements that are giving me that "come hither" look: NKE, which announces on Tuesday after market close and GME, which announces on Thursday after market. They're not looking especially great right now (each bringing in about a .70 ($70) credit for the 70% probability of profit short strangle setup (I generally like to see a 1.00 ($100) credit out of these), but they're worth keeping an eye on in the event that they get "frisky" right before earnings. The other thing I have my eyes peeled for is further weakness in the VIX with my "dream" price somewhere around 12. See my VIX post for what I'm looking at to play either VIX, VXX, or UVXY long ... .
NYSE:NKE
by NaughtyPines
NKE -- POST SPLIT/EARNINGS PREMIUM SELLING PLAYAfter its split and shortly post-earnings, NKE still enjoys a fairly high level of volatility such that it offers a 1.00 credit plus premium setup (rank 53/implied 24). Here's a setup: NKE 58/67 Feb 12th short strangle POP%: 74% Max Profit: 1.07 credit ($107/contract) BPE: Undefined Break Evens: 56.93/68.07 Notes: I ordinarily only want to enter a short strangle when the implied volatility rank exceeds 70%. However, my guess is that the split may have affected the 52-week vol stat (don't quote me on that), so I'm willing to play it even though its volatility isn't above the 70th percentile ... . That being said, we've got earnings upon us, so I'll have to look at it again at market open, see what buying power I have available, and make a decision as to whether I want to enter a 45 DTE setup here or not.
NYSE:NKE
by NaughtyPines
WEEK OF 1/4 -- EARNINGS TO PLAY VIA OPTIONS: MON, BBBY, WBAAlthough I traditionally see earnings season as beginning with the first play in the alphabet (AA), there are some that occur before AA that I've frequently played. Next week, it's MON, BBBY, and WBA. MON announces earnings on 1/6 before market open (look to put on that play before Tuesday NY close); WBA, 1/7 before market open (put on Wednesday before market close); BBBY after market close on 1/7 (Thursday). MON's implied volatility rank is currently 63, has an implied volatility of 31, and a short strangle appears to offer nearly 1.00 in credit ($100 per contract) for a 93/104 short strangle, Jan 15th expiry (currently .97 at the mid price). BBBY (rank 49/implied 45) needs to have its implied pop a bit to make it 1.00+ attractive; I generally only like to play these when the implied volatility rank is high (70+) and it's implied is kind of right in the middle of its 52-week range right now. WBA (rank 83/implied 41): the 78.5/91.5 Jan 15th short strangle is currently going for 1.05 at the mid price. I looked at other earnings announcement plays for next week (CUDA, FINL, KBH, HELE, for example), but none of them look particularly attractive for an options strategy because liquidity is poor on the options end of things and/or the underlying doesn't offer weeklies.
M
by NaughtyPines
NKE EARNINGS PLAYNKE announces earnings on 12/22 (Tuesday) after market close, so look to put on your play before NY close. Here's the standard short strangle setup: Dec 31st 118/141 short strangle POP%: 75% Max Profit: 1.25 credit ($125)/contract BPE: ~$1572 BE's: 116.75/142.25 Note: I ran an iron condor setup, but it looks like it will generate less than a .50 credit/contract ... . I would also note that it may be less than ideally liquid, so you may want to shoot for a higher fill price if the opportunity presents itself.
NYSE:NKE
by NaughtyPines
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