By Mike Yamamoto of OptionMonster
NEW YORK -- Short-term traders ran with Nike (NKE) on Tuesday.
OptionMonster's tracking systems detected heavy buying in the Weekly 73 calls that expire at the end of Friday's session. More than 5,400 of them traded, mostly for 36 cents to 49 cents, in volume far above the strike's previous open interest of just 439 contracts.
These calls lock in the price where the athletic-apparel stock can be purchased, letting investors cheaply position for a rally. The contracts can provide significant leverage while limiting the amount of capital at risk, but they will expire worthless if shares remain below $73 through this week's close.
Nike's stock bounced 1.13% to $72.71 Tuesday but has been falling since it peaked at $80.26 in early December ahead of its last earnings report. The shares appear to have found support around the $72 level this week.
Total option volume in Nike was triple its daily average for the last month, with calls outpacing puts by more than 3 to 1.
Yamamoto has no positions in NKE.