Can Nike Continue This Bullish Run?

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With shares of Nike (NYSE:NKE) trading around $60, is NKE an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Nike is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company sells its products to retail accounts, through Nike owned retail stores and internet sales, and through a mix of independent distributors and licensees, in approximately 190 countries around the world. Nike focuses its product offerings in seven key categories: running, basketball, soccer, men’s training, women’s training, Nike sportswear and action sports. As the staying active movement is on the rise, Nike is poised to see profits well into the future.

T = Technicals on the Stock Chart are Strong

Nike has seen a tremendous uptrend over the last decade. The stock is currently trading at all-time highs, something that has been very familiar over the last few years. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Nike is trading above its risking key averages which signal bullish price action in the near-term.

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NKE

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Nike options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Nike Options

21.52%

26%

29%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.

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Put IV Skew

Call IV Skew

May Options

Flat

Average

June Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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