I am recommending we roll the short leg of our Nike (NKE) LEAP call recovery position out two weeks and to a lower strike price to generate more income. In the short term, the stock is likely to trade based on traders’ hopes and fears about the holiday shopping season. Long term, shares are seriously undervalued.
I am also recommending we roll our SPDR S&P Biotech ETF (XBI) put out two weeks to generate more income and reduce our net debit on the position.
NKE Nov Week One (11/4) 95 Call
Note: No action is needed on the NKE Jan 2024 (1/19/24) 70 Calls at this time.
Current Stock Price: $90.27
Cost Basis: $106.75
- Buy to close 3 NKE Nov Week One (11/4) 95 Calls for around $0.06 each ($0.18 total)
- Sell to open 3 NKE Nov Monthly (11/18) 92 Calls for around $2.12 each ($6.36 total)
- Set initial credit limit at $2.06 ($6.18 total), but adjust as needed to roll today
New Cost Basis: $100.57
XBI Nov Week One (11/4) 77.50 Put
Current Stock Price: $81.11
Net Debit: $5.61
- Buy to close the XBI Nov Week One (11/4) 77.50 Put for around $0.15
- Sell to open the XBI Nov Monthly (11/18) 77.50 Put for around $1.35
- Set initial credit limit at $1.20, but adjust as needed to roll today
New Net Debit: $4.41