Nike options analysis

Nike, Inc. (NKE) is a great company in which I intend to hold shares for the long-term.

In early February 2019 I wrote out of the money covered calls on the underlying shares I own. Shares have experienced a roller coaster ride subsequent to early February and are now trading a few cents/share above my strike price.

Today I have closed the April 2019 contracts at a profit and have written new covered calls at a higher strike price and further out on the calendar.


In my February 4, 2019 article I disclosed that I had written a few covered call contracts on my Nike, Inc. (NKE) shares with an April 18th expiry (markets are closed on Good Friday).

In exchange for granting someone the right to acquire NKE shares from me at $87.50 I received $1.35 share (each option contract is for 100 shares) less a nominal amount for commission.

Subsequent to writing these contracts, NKE’s share price has exhibited some volatility and I wrote an article on March 22, 2019. In that article I indicated I was of the opinion NKE shares were richly valued.

Despite my opinion that shares were richly valued, investors have not shared my sentiment and NKE shares have proceeded to increase in value; as I compose this article shares are trading at ~$87.90.

It is certainly not my intent to part with my NKE shares so I have closed the option contracts which expire this Thursday at a cost of $0.72/share. This means I have come out ahead $0.63/share ($1.35 I collected in February less the $0.72 I just paid to close the contracts).

I have also written new covered call contracts with a September 20, 2019 expiry and a $92.50 strike price. In exchange for writing the new covered calls I have received $3.14/share.

If NKE’s share price remains below $92.50 at expiry then I retain my shares and keep 100% of the premium I have just collected.

If NKE’s share price rises above the $92.50 strike price and I still do not want to part with my NKE shares I can do what I have just done today. I can close the open call contracts at a cost and I can write new call contracts for a date further out on the calendar and at a higher strike price.

Keep in mind that as the owner of NKE shares I still continue to collect the quarterly dividends while the option contracts are open.

I hope you have found this article to be of value and wish you much success on your journey to financial freedom.

Thanks for reading!

Note: I sincerely appreciate the time you took to read this article. Please send any feedback, corrections, or questions to [email protected].

Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.

Disclosure: I am long NKE.

I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.