Options Intelligence Report: Nike, Inc. (NKE), Equinix, Inc. (EOIX) & Visa, Inc. (V)
Options Investor Tightens Laces On Nike, Initiates Short Strangle Strategy
NKE ñ Nike, Inc.
A short strangle enacted on the maker of athletic footwear and accessories in the first 30 minutes of the trading day indicates one investor expects shares of the underlying stock to remain range-bound through October expiration. Nikeís shares slipped slightly lower by 0.75% to $77.27 this morning. Shares rallied significantly earlier this week, adding a total of 5.50% from Mondayís low of $73.74, up to Wednesdayís high of $77.79. The stock received an upgrade to ëbuyí from ëneutralí and an increased 12-month target share price of $85.00 at Sterne, Agee & Leach on Monday.
One options player, however, expects share price movement to quiet down and volatility to subside through October expiration. The investor sold 5,100 puts at the October $70 strike for a premium of $2.90 each and sold the same number of calls at the October $80 strike for $4.40 apiece. Gross premium pocketed on the strangle strategy amounts to $7.30 per contract. The investor keeps the full amount of premium received as long as shares of the underlying stock trade within the boundaries of the strike prices described through expiration. But, the short stance assumed in both call and put options expose the strangle-player to losses should Nikeís share price rally above the upper breakeven price of $87.30, or should shares plummet through the lower breakeven price of $62.70, ahead of expiration day in October.
EQIX ñ Equinix, Inc.
Options players breakfasted on Equinix call options in the early hours of the trading session with shares of the provider of data center services gaining as much as 8.25% to reach an intraday high of $107.44. EQIX shares tapered off slightly by 10:40 am (ET), but are still net up 5.45% at $104.65. Bullish traders expecting continued share price appreciation ahead of May expiration picked up roughly 2,300 calls at the May $105 strike for an average premium of $1.03 apiece. Investors long the calls make money as long as shares of the underlying stock rally above the average breakeven price of $106.03 by expiration day.
Buying interest spread to the higher May $110 strike where investors scooped up 1,000 calls at an average premium of $0.78 each. Traders holding the higher-strike contracts profit if Equinix, Inc. shares surge 5.85% over the current price of $104.65 to break through the current 52-week high on the stock of $110.57, and ultimately exceed the average breakeven point on the calls at $110.78 by May expiration. The surge in investor demand for call options on the stock lifted EQIXís overall reading of options implied volatility 25% to 42.84% as of 10:45 am (ET).
V ñ Visa, Inc.
Shares of the global payments company are up more than 2.05% to $87.45 just before 11:00 am (ET). The rally in the price of the underlying shares during the past couple of days inspired investor appetite for call options on the stock. Near-term optimists positioning for continued share price appreciation picked up at least 5,500 calls at the May $90 strike for an average premium of $0.69 apiece. Call-buyers make money if Visaís shares exceed $90.69 by expiration day in May.
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