The set-up: Nike is the biggest and most-dominant company in the athletic footwear and apparel business, but the stock fell after its recent earnings announcement and the chart has been interesting to watch since.

There is news in the stock this morning:   It was raised to overweight from equal weight by Morgan Stanley.

What I see: This is a pure technical play, based on Nike chart. The stock closed Wednesday at the 9-exponential moving average and is putting in a hammer candle this morning.

How I’m playing it: I’m looking at NKE September 1 at-the-money call options, where I believe there’s a 10 percent gain to be had if the pattern continues, if it nears the close with a hammer candle over $59.71. If the pattern holds, I will make my trade late in the day.

If Nike falls out of the hammer-candle continuation pattern, I’ll pass on it for now, but will keep watching.


   Davis Martin is the head trader at He trades SPY calls and puts and swing trades mid-large cap stocks and stock options. He has no shares, options or open orders in NKE, but is watching it closely, hoping to trade as described in this commentary; he has never traded NKE before.

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