Options Corner: NKE Trading at 9-Year Lows into Earnings

Company Overview - Nike's stock has experienced a significant decline, down nearly 70% from its all-time high of approximately $179.10 nearly five years ago, reaching 9-year lows ahead of its earnings report [2][4] - The current stock price is expected to open around $52, which is far below key moving averages, including the 200-day moving average at $66 and the 50-day moving average near $60 [5][4] Technical Analysis - The stock is in a clear downtrend, with the Relative Strength Index (RSI) near 26, indicating oversold conditions; however, this has not led to a rebound in the past [5][6] - Despite being oversold, the momentum remains negative, and the stock has repeatedly failed to find a bottom over the past year [6][7] Market Conditions - Nike's challenges include compressing margins and elevated inventory levels, with 15% of its business tied to the struggling Chinese market [8][9] - The company is attempting to implement a "win now" strategy under CEO Elliot Hill, but it has not yielded positive results thus far [8] Options Strategy - A bullish call diagonal strategy is proposed, involving buying a slightly in-the-money 50 strike call option expiring on April 17 and selling a near-term 56 strike call option expiring on April 2 [10][11] - The strategy is designed to capitalize on potential upward movement in the stock, with a break-even point above $52, allowing for profitability if the stock price rises [12][14]