×

Trader bets on Nike earnings stumble

One trader is betting that Nike shares will stumble when it reports earnings next week.

The company's stock is up 23 percent in the past year but options traders are betting that the run may soon end. On Thursday, when options volume ran more than two times its daily average, one trader placed a complicated transaction that is targeting a 5 percent decline for Nike shares in the next month.

"The trade actually makes the most money at $91," explained Dan Nathan, a CNBC contributor and founder of RiskReversal.com.

According to Nathan, the trade is playing for a range that Nike stock has been stuck in.

Nike Logo
Getty Images

Read More Chinese shoe factory workers strike over benefits

"The thing for the last five months has spent a lot of time right between $90 and $100," he said. "It kind of got back up there just a couple of weeks ago before we had the selloff."

In its last reported quarter, Nike warned that future orders were growing at their slowest rate in four quarters. It also expressed fears that currency devaluations could impact foreign sales, which make up over half its revenue. And since the company's last quarter, the U.S. Dollar Index is up 13 percent.

"The options market is implying about a 4 percent one-day move after results next week," said Nathan. "The investor is looking to sell more options than they are buying, but they are playing for a move down 5 percent, in line with that implied move next week on earnings."

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.