Today we have added a short put in Nike (NKE) on the gap down in the stock. We already have 1 contract that we sold previously on the back of Tim Cook’s insider buying. We are surprised by the move lower as the earnings “miss” wasn’t really a miss with Nike beating EPS by 24% and slightly beat revenue expectations. Right now they are in inventory cleanup mode but that is a setup for better margins in the future. And we are investing based on the future outlook. With this put sale, we may end up owning 200 shares of stock at June expiration. Sell to open: NKE June 18th (monthly) 47.50 strike put
Credit: 4.10
Max risk = owning 100 shares at 47.50/share at June expiration (that is a $4,750 potential investment)
Max reward = 4.10 or $410.00 but we are going to take that money and buy shares with it.
We used the $410 and bought 9 shares of NKE stock at 45.72/share.