Weekend Trader Series
October 27, 2024
Open Positions Update
- The Merck (MRK) November 15, 2024, 125-strike put reaches its time-stop this Monday, October 28. Close the position at a limit price within range of the current market price when you place the order.
- Please extend the scheduled time-stop date on the Toast (TOST) January 17, 2025, 25-strike call to Monday, November 4.
- The Iron Mountain (IRM) November 15, 2024, 105-strike call was closed after hitting its target profit of +100%. If you have not already done so, please close out of your IRM position at the earliest opportunity.
The following is this week's recommendation:
Nike (NKE)Place a limit order to buy the Nike (NKE) January 17, 2025 82.50-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, October 25, this option was offered at $6.55. NKE closed at $78.85 on Friday, October 25.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, November 25, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
After earnings, shares of apparel retailer Nike (NKE) experienced a bearish island reversal on the charts earlier this month. The security is now below its early October low and 2022 low at $82, and broke beneath a trendline connecting higher lows since early August. Adding to this shaky technical foundation, NKE is below the 80 strike where there is big call and put open interest (OI), as well as its 50-day moving average.
Big puts below the equity’s current level of trading could act as magnets down to the 70 strike or below. Plus, Nike stock is down double digits since the start of 2024 and over the last 12 months, but 20 analysts still maintain a “buy” rating. This leaves room for downgrades, which could pressure shares lower.
Our recommended January 17, 2025 82.50 put has a leverage ratio of 7, and could double on a 12.1% fall in the underlying shares.
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