Upside option positions in Nike returned exponential gains today thanks to positive quarterly results.
On June 13, Investitute’s market scanners found that 6,400 Weekly $55 calls expiring this afternoon were purchased for $1.02 to $1.12 with shares at $54.47. These were clearly new positions, as open interest in the strike was only 924 contracts before the activity appeared.
Today those calls traded up to $4.60, a profit of more than 300 percent. The stock rose less than 9.5 percent in the same period, showing how options can far outperform their underlying shares. (Investitute co-founder Jon Najarian also noted bullish put selling in Nike just before its earnings report after Tuesday’s close.)
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
NKE jumped 10.96 percent today to end the session at $59 even. The athletic-apparel retailer surged after beating income and sales expectations while confirming a deal to sell its products through Amazon.com.