Nike (NKE) - Get Report has a history of substantial positive earnings surprises. If this pattern repeats on Tuesday after the close, it could provide investors with an opportunity to profit. 

The chart reveals a tightening of the trading range since the first week of September. The current narrow range of 1.5 points could be a predictor of greater volume later in the week.

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Based on the appearance of the chart, timing is excellent right now to enter an options trade with a potential earnings surprise in mind. If you agree that a positive surprise is likely, look at the Sept. 30 call options, which expire in four days. The stock closed on Friday at $55.15. The 55 call closed at an ask price of 1.46. Including trading fees, the total cost of purchasing this option is $155. The stock has to move only 1.5 points higher for this call option to become profitable. There is a risk, however, that the stock either doesn't move far enough or that it will move down.

If you expect a surprise but are not sure of the direction, a long straddle could be the solution. In addition to buying the 55 call, look at the 55 put option. It closed on Friday at an ask price of 1.29, so its total cost is $138. The call and put together cost $293. This sets up two break-even prices, one above ($57.93) and one below ($52.07) the stock's recent price. These break-even prices represent the distance between the two options' strike prices and the overall cost of the straddle.

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Both the long call and the long straddle are risky, especially with only four days until expiration. However, if a surprise does create a big one-day move in Nike's price on Wednesday, the risk could be worthwhile.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Besides blogging at

TheStreet

,

Michael Thomsett also

blogs at Options Money Maker,

the

Top Advisor's Corner

at

Stockcharts.com,

Seeking Alpha

and several other websites.

He has been trading options for 35 years and has published books with Palgrave Macmillan, Wiley, FT Press and Amacom, among other publishers.

His latest book is

Making Money with Option Strategies

. You can find it at Amazon and Barnes & Noble.