Mike Khouw Discusses Options Strategies for FedEx and Nike Ahead of Earnings
During the latest episode of Options Action on CNBC, renowned options trader Mike Khouw shared his insights on potential options strategies for two major companies, FedEx and Nike, ahead of their earnings reports.
FedEx
FedEx Corporation (FDX), a global courier delivery services company, is set to report its fiscal Q4 earnings on July 21, 2021. Khouw suggested a bull call spread as a potential options strategy for FedEx.
Bull Call Spread:
- Buy 100 FedEx August 20 $225 calls
- Sell 100 FedEx August 20 $240 calls
This strategy involves buying a call option at a lower strike price and selling a call option at a higher strike price with the same expiration date. The maximum profit is achieved when the stock price is between the two strike prices at expiration. Khouw believes that FedEx’s earnings report will be positive and the stock price will be above $225 in August, making this strategy attractive.
Nike
Nike, Inc. (NKE), a leading footwear and apparel company, is scheduled to release its Q1 fiscal 2022 earnings on July 22, 2021. According to Khouw, a bear put spread could be an effective options strategy for Nike.
Bear Put Spread:
- Sell 100 Nike July 23 $125 puts
- Buy 100 Nike July 23 $115 puts
This strategy involves selling a put option at a higher strike price and buying a put option at a lower strike price with the same expiration date. The maximum profit is achieved when the stock price is above the selling price at expiration. Khouw thinks that Nike’s earnings report might be disappointing, causing the stock price to drop below $125 in July, making this strategy worth considering.
Personal Impact
As an individual investor, you can benefit from these strategies by potentially increasing your returns while limiting your downside risk. By implementing a bull call spread for FedEx or a bear put spread for Nike, you can profit from their earnings reports without having to own the underlying stocks.
Global Impact
The options strategies discussed by Mike Khouw for FedEx and Nike can impact the broader market as well. For FedEx, a positive earnings report could lead to an increase in stock price and a potential surge in call option buying, resulting in increased market liquidity and a potential boost for the overall market. Conversely, a disappointing earnings report from Nike could cause a drop in stock price and increased put option buying, potentially leading to increased market volatility.
Conclusion
With the upcoming earnings reports from FedEx and Nike, options traders like Mike Khouw are sharing their insights on potential strategies for these companies. By employing strategies like bull call spreads and bear put spreads, investors can potentially enhance their returns while minimizing their risk. These strategies can also have broader implications for the market, affecting market liquidity and volatility.
As always, it’s important to carefully consider your investment objectives, risk tolerance, and market conditions before implementing any options strategies. Remember that options involve risks, and you should only trade options if you are familiar with their risks and requirements.
Stay informed and stay ahead of the market by following Options Action on CNBC for more expert insights and strategies.
