Nike (NKE) sold off sharply this morning following the release of its latest quarterly earnings. The company reported better-than-expected earnings, but Wall Street was disappointed by a big increase in inventory and management’s lowered forecast for the full year.
With the NKE Sep Week Five (9/30) 110 Put we sold deep in the money, I am recommending we accept shares. We will sell calls against them to reduce our cost basis.
We also purchased a protective put to hedge against a post-earnings sell-off. That put has roughly increased sharply in value and the $84 level looks to be holding. Let’s close it now. The profit we generate will reduce our cost basis on the position.
Current Stock Price: $84.99
Net Debit: $12.61
- Sell to close the NKE Oct Week One (10/7) 90 Put for around $5.50, but adjust as needed to close today
- Accept shares
New Cost Basis: $117.11