×

Why FedEx Is Cheap and the Case Against Nike

Two global companies, two very different trades. That sums up Friday’s Options Action, where the traders found a reason to be bearish, and then a company to get bullish on.

First, the bearish trade. RiskReversal.com’s Dan Nathan made the case that a global slowdown would cause pain for Nike . This, in addition to weakening footwear trends, gave him ample reason to put on a bearish trade.

Dan suggested buying the 97.5/92.5 put spread for $1.25. His trade and payout are below.

DAN’S NIKE TRADE

  • BUY THE JULY 97.50-STRIKE PUT FOR $2.60
  • SELL THE JULY 92.50-STRIKE PUT FOR $1.35

HOW DAN’S NIKE TRADE MAKES MONEY

  • LOSSES ABOVE $96.25
  • PROFITS BETWEEN $96.25 AND $92.50
  • PROFITS CAPPED AT $92.50

On to the bullish trade. Oppenheimer’s Carter Worth took a look at FedEx , and argued that not only does the chart look attractive, but the stock is incredibly cheap. He pointed out that FedEx is trading at the same P/E multiple as the S&P, which is as cheaply as you’ll be able to ever be able to buy it, in Carter’s estimation.

CRT Capital’s Mike Khouw agreed that FedEx is a bargain. He suggested making a bullish bet by buying the August 92.5-strike call for $2.50. The trade and breakdown:

MIKE’S FEDEX TRADE

  • BUY THE AUGUST 92.50 STRIKE CALL FOR $2.50

HOW MIKE’S FEDEX TRADE MAKES MONEY

  • PROFITS ABOVE $95.00
  • LOSSES BELOW $95.00


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

Latest Video

Tutorials

Host Bio

  • Melissa Lee

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

Options Action Traders

From Our Sponsor

Options Action Newsletter:

Sign up to receive exclusive Options Action content. Each month you'll receive an exclusive message from host Melissa Lee and insight directly from one of the members of our Options Action panel. Keep your pulse on the market with the Options Action newsletter.

Please enter a valid email address
To learn more about how we use your information, please read our Privacy Policy.