Nike traders bet the athleisure stock will climb 8% in the next month

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Nike gears up for earnings, here's what investors are expecting

Nike could be ready to run.

That is, at least, a popular prediction among options traders, who bet heavily on a bullish scenario for Nike's stock following the sportswear giant's earnings report scheduled for after Tuesday's closing bell.

While the move on earnings was expected to be roughly in line — 5% in either direction compared with Nike's average of 4% — heavier-than-usual options volume suggested another strategy was at play, Mike Khouw, co-founder and chief strategist at Optimize Advisors, said Monday on CNBC's "Options Action."

"Calls outpaced puts by about 2 to 1," and total options volume was three times the average, Khouw said, adding that the October $95 calls were the most active trades.

"Over 12,000 of those traded for an average price of about 40 cents," the strategist said. "Normally, when we see this kind of activity, we're seeing buyers of those calls, and those would be bets that the stock is going to race through that strike by at least the premium they paid. But in this case, they actually were sellers, and I'm guessing that they were doing that against long stock positions."

That still represents a bullish trade, Khouw said — just not as bullish as buying a call outright.

"While this is still a bullish bet, it is a much more modestly bullish one because you want stocks to run to your short strikes, not through them," he said. "This is basically a bet that it's probably not going to break out to new highs, but this is usually a position that is put on by people who are still comfortable owning the stock nevertheless. So, looking maybe for some modest increases, but no more than 7 or 8% by October expiration."

That means Nike, which was trading near $88  early in Tuesday's session, could run to $95 by October's end, according to some traders. Nike reached its 52-week high of $90 in April.

But if you ask Guy Adami, a regular trader on CNBC's "Fast Money" and director of advisor advocacy at Private Advisor Group, he'd rather wait and see how the Tuesday evening earnings report plays out.

"[The] $90 [level] has been a top a few times, so the strike price Mike talks about, the 5% move, squares you right up with 90 bucks," he said. "I'm inclined to rather buy it on a breakout above 90 than to try to play stock market ahead of a quarter in which they could say just about anything, especially with 26 times forward earnings. So, I would wait and see what they say."

Nike shares were down slightly Tuesday trading.

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