Read This Before Ditching Nike Stock

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A historically bullish signal is flashing for the shoe stock

Premier Retailer Nike Inc. (NYSE: NKE) hasn’t had much luck in 2022, with a bearish gap sending the stock back below the once favorable 200-day moving average earlier this week, and a sizable 9.2% year-to-date deficit already to his credit. Investors shouldn’t worry just yet, and in fact, the pullback in Nike stock may well present the perfect buying opportunity for bulls looking to get into the shoe stock without paying exorbitant premiums. .

Indeed, stocks have approached just one standard deviation from their 260-day moving average after a long stretch above the trendline. According to data from Schaeffer’s senior quantitative analyst, Rocky White, the stock has seen four similar pullbacks in the past three years. A month after three such occurrences, NKE was higher, with an average return of 7.1%. From its current perch at $151.28, a similar move would put NKE just above the $164 level.

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The aforementioned bearish gap came after HSBC stepped in with a lower rating and price target, citing concerns over supply chain issues. However, this analyst might be the outlier, as only four of the 22 covered call NKE a “hold”, while 18 “buy” or better are on the table.

Options Traders have been much more pessimistic, and an unwinding of some of this sentiment could boost equities. The stock sports a Schaeffer Open Put/Call Interest Ratio (SOIR) of 1.00, which is over 90% of the past year’s readings. In other words, short-term options traders had a much greater bias towards put options than usual.

It might be a good idea to speculate on the next move in Nike stock with options. NKE’s Schaeffer Volatility Index (SVI) of 22% is higher than just 12% of the past year’s reading. In other words, options traders are currently pricing relatively low volatility expectations.

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