NKE Analysis


Update Oct. 1, 2018I exited NKE for a $2.45 debit, a $0.64 profit on the options, with shares trading at $83.43, which $1.08 below the entry price. The share close $1.05 below the short calls strike price.

Implied volatility was 22% when i exited, eight points below its entry level.

I exited at 20.7% of maximum profit. That was below my target, 25% of max, due to difficulties on my part in correctly using the TastyWorks brokerage interface.

Shares declined by 1.3% over seven days, or a -67% annual rate. The options position produced a 26.1% return for a +1,362% annual rate.

I have entered a short iron fly spread on NKE, using options that trade for the last time 24 days hence, on Oct. 19. The premium is a $3.09 credit and the stock at the time of entry was priced at $84.51.

I made the decision to enter the trade in my account based on proximity to an earnings announcement, on Sept. 25 after the closing bell..

The profit zone for this position is between $87.59 on the upside and $83.59 on the downside.

Implied volatility stands at 30%, which is 2.4 times the VIX, a measure of the volatility of the S&P 500 index. NKE’s IV rank stands at 81.6%

The price used for analysis was $84.49.

Premium: $3.09 Expire OTM
NKE-iron condor Strike Odds Delta
Long 88.50 72.2% 30
Break-even 87.59 74.7% 24
Short 84.50 50.0% 53
Short 84.50 50.2% 47
Break-even 83.59 74.0% 23
Long 80.50 72.5% 25

The premium is 77% of the width of the position’s wings.

The risk/reward ratio is 0.2:1, with a maximum potential loss of $6.60 per share and a maximum potential gain of $3.09.

The bid/ask spread was 3.2%.

By Tim Bovee, Portland, Oregon, Sept. 25, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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