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Options Action Recap: Nike, Just Short It?

You might be wondering why the Nike April 105- and 100-strike puts are so active today.

Are options traders concerned about rising input costs and a slowing global consumer? Maybe. Perhaps they saw the disappointing monthly sales in McDonalds– driven by poor results in Europe – and got skittish on Nike’s international exposure.

Or perhaps they just saw last Friday’s Options Action, where Dan Nathan of Riskreversal.com laid out a bearish trade incorporating all the above points.

Specifically, Nathan suggested buying the April 105/100 put spread in Nike for $0.90. His trade and breakdown are below.

DAN’S NIKE OPTIONS TRADE

  • BUY APRIL 105-STRIKE PUT FOR $1.80
  • SELL APRIL 100-STRIKE PUT FOR $0.90

HOW DAN'S TRADE MAKES MONEY

  • LOSSES ABOVE $104.10
  • PROFITS BETWEEN $104.10 AND $100
  • PROFITS CAPPED AT $100

Our second trade involved a slightly more complicated structure on Las Vegas Sands According to Carter Worth at Oppenheimer, shares of LVS look ready to breakout and could hit $65 by May. As a bullish trade on the casino giant, Brian Stutland of Stutland Equities suggested using a Call Spread Risk Reversal. This one’s a little complicated, but the trade’s appeal is simple: it pays you to put it on. Specifically, Stutland sold the June LVS 46-strike put for $1.25 and used that money to buy the June LVS 60/65 call spread for $1.15, a structure that offers a $0.10 credit. The main caveat here is that by selling that put, Stutland could be obligated to by LVS stock at that put’s strike price, or in this case for $46.

His trade and breakdown are below.

BRIAN’S LAS VEGAS SAND OPTIONS CHAIN

  • SELL JUNE 46-STRIKE PUT FOR $1.25
  • BUY JUNE 60-STRIKE CALL FOR $2.00
  • SELL JUNE 65-STRIKE CALL FOR $0.85

HOW BRIAN’S TRADE MAKES MONEY

  • PROFITS CAPPED AT $65
  • PROFITS BETWEEN $45.90 - $65
  • GET LONG AT $46
  • LOSSES BELOW $45.90

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