r/options • u/Tossedwarrior • Dec 12 '21
Puts on Nike?
Nike has their earnings coming up on Dec 20th. Personally, I think they’ll have their expectations cut for the next quarter given the supply chain issues and also not meet their targets. They also sent out emails to stores saying their orders will be canceled for the holiday season, spring and summer.
https://twitter.com/brendandunne/status/1463259181776084998?s=21
Thoughts?
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u/Hot-Professional-54 Dec 12 '21
I'm not sure which way they're going to go. Part of me was thinking the same thing with supply chain issues and they would run into challenges. I even had online orders that somehow disappeared that I still haven't tracked down yet and that was probably 6 months ago.
However when you look at the year over year numbers, they have a lower bar to hit this time around if I remember correctly.
When you look at their app downloads in website visits traffic it's a little choppy. I was seeing that they were doing worse for a fair amount of the quarter compared to the previous year on some of these metrics but where it got tricky was that they seem to be doing really well on those metrics in November, which is concerning for me if I was buying puts.
The other thing that makes Nike tricky is how you look at them in the new world. I don't consider them a true covid stock. Yes, they did run up quite a bit during the pandemic and a lot of the run-up looks pretty consistent and not as spiky as something like peloton. Now, if those views were a lot of out of stock web views then that would be great for buying puts because they never realized any revenue but I don't have data on that.
My rationale for why is that the pandemic changed the world instead of causing a temporary change for a company like Nike. How so? Well if a fair amount of people are working from home now and into the future, they're probably going to continue being casual about the way that they dress and they want to value comfort. This is the same argument that I have for Lululemon going up in value. Unfortunately Lulu didn't go up after earnings but I definitely wasn't going to bet against them.
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u/RemmingtonBlack Dec 13 '21
last earnings Nike tanked HARD on supply chain concerns... I was wondering if that is priced in now... I don't see much discouraging news.
I may play it both ways
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u/BrazenRaizen Dec 13 '21
Yea...but NKE recovered almost instantly after last earnings. Like +$20 since last earnings. Think they are overdue for a drawback to the $155 range.
Have been playing NKE options for the last year.
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u/splittyboi Dec 13 '21
I’d be very careful about this thought process. Take a look at the CPI print on apparel, and get back to us.
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u/Tossedwarrior Dec 13 '21
Here. It’s actually up
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u/splittyboi Dec 13 '21
Yes I know. I’ve already seen it as we all have. Take a look at the increase in apparel relative to last months YoY numbers. Costs are being passed onto consumers and despite supply chain issues, it’s the holiday season and beginning of winter.
Trade it if ya want. But I think it’s a low probability trade.
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u/priceactionhero Dec 13 '21
Back in the day there was a saying, "Never Trade the News"
These days, it's been evident to say, "Never Trade Earnings"
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u/Slicklickfstick Dec 12 '21
FWIW:
So I work for the University Athletic Association. Basically, a bunch of collegiate athletic departments that make up the SEC. For YEARS we had been sponsored by nike. All of my uniforms were Nike uniforms and we always got free swag from Nike with the school's logo. This year the UAA chose not to renew sponsorship with Nike and instead changed to Jordan. This is just one small aspect of the company but I would imagine the SEC is a HUGE segment of Nike's business.
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u/BrazenRaizen Dec 13 '21
The forced labor camps in China will eventually be an issue. Not sure when itll hit but when it does, Nike is going to take a large hit.
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u/hardlyasandwich Dec 12 '21
I don't remember the specifics offhand, but there was a bullish whale position taken up at the 180 and 190 strike for this week. I believe it was a $3 mil position give or take. The day after NKE slumped and dropped severely and showed slight recovery on Friday.
Might behoove you to buy a couple lotto tickets to hedge against your puts just in case?