Call Spread on NKE on 12/22/2015

NIKE, Inc. (NKE) designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories for men, women, and kids worldwide. The company offers products in eight categories, including running, basketball, football, men’s training, women’s training, sportswear, action sports, and golf under the NIKE and Jordan brand names. 

The DJIA component is expected to report second quarter earnings after the bell on Tuesday, December 22 with a conference call scheduled for 5:00 pm ET. Analysts are looking for earnings per share of 86c on revenue of $7.81B. The consensus range is 80c-91c for EPS and $7.67B-$7.9B for revenue. In its last earnings report, Nike forecast Q2 revenue growth in the mid-single digits. 

On November 20, Nike announced a $12B share repurchase program. The company believes the current $8B buyback program will be completed before the end of FY16, at which point the new program will commence. Additionally, Nike's board of directors increased its quarterly dividend on the company's outstanding Class A and Class B Common Stock of 32c per share, a 14% increase over the previous dividend. Further, Nike's board approved a two-for-one split of the company's Class A and Class B common shares.

Ahead of the earnings, shares have formed a bullish "cup and handle" and are expected to head higher from these levels.

We are trading January 15th Options

52-Weeks Trading Range: $90.69 - $135.30

Last Trade: $131.00

Trade Buy 1 January $130.00 Call at $5.00 Sell 1 January $140.00 Call at $1.20 For a net debit of $3.80 Profit/Loss Analysis Breakeven at $133.80 Maximum profit is $620.00 at strike of $140.00 Maximum loss is ($380.00) at strike of $130.00 Closing Summary Sold 1 January $130.00 Call at $0.00 Bought 1 January $140.00 Call at $0.00

Position closed on 1/21/2016 at price of $0.00 with a -100.00% loss in 29 days.

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