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Options Action ReCap: Fade the Rally in Nike and Apple

Going against the herd is never easy, especially when money is on the line, but that’s exactly what our traders did last Friday.

First up was a bearish trade on Nike as the apparel giant touched all-time highs. According to Oppenheimer’s Carter Worth, the stock’s rally looks a little long in the tooth, and he made the case for hitting the pause button. To profit from that pullback, Options Action’s Mike Khouwsuggested buying the April 100/90 Put Spread for a $1.35.

Trade and breakdown are below.

MIKE’S NIKE OPTIONS TRADE

  • BUYING THE APRIL 100-STRIKE PUT FOR $2.25
  • SELLING THE APRIL 90-STRIKE PUT FOR $0.90

HOW MIKE’S NIKE TRADE MAKES MONEY

  • LOSSES ABOVE $98.65
  • PROFITS BETWEEN $98.65 - $90.00
  • PROFITS CAPPED AT $90.00

Our other trade involved a much more complicated structure on a much more complicated name: Apple . Dan Nathanof Riskreversal.com correctly stated that the stock would his $500. But he’s fading the move. As a bearish trade, he bought the March 480/460/440 put fly for $3.00. His trade and breakdown are below.

DAN’S APPLE OPTIONS TRADE

  • BUY 1 MARCH 480-STRIKE PUT FOR $11.50
  • SELL 2 MARCH 460-STRIKE PUTS FOR TOTAL OF $10.80
  • BUY 1 MARCH 440-STRIKE PUT FOR $2.30

HOW DAN'S TRADE MAKES MONEY

  • LOSSES ABOVE $477
  • PROFITS BETWEEN $477 - $443
  • GET LONG AT $460
  • LOSSES BETWEEN $443 - $400
  • LOSSES CAPPED AT $400

Watch Options Actionon CNBC Fridays 5:00pm ET, Saturdays at 6a ET and on Sundays at 6a ET

Questions, comments send them to us at: optionsaction@cnbc.com

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  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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