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We are recommending a bullish trade on Nike, Inc. (NYSE:NKE).

NKE recovered from its drop in December after reporting earnings. The company beat expectations in the critical Chinese market, and that pushed prices higher.

After some negative press coverage last week, the stock is still holding in its consolidation range. Because we like the fundamental picture for NKE, we think now would be a good time to sell puts.

Staying Strong Through Bad News

NKE investors collectively held their breath last Wednesday evening as just 33 seconds into the much-anticipated Duke vs North Carolina rivalry game, Zion Williamson — the best player in college basketball and the projected number one pick in the upcoming NBA draft — went down with an injury after blowing through the side of his left shoe…a signature Nike model created for Paul George.

Fortunately for NKE, the injury appears to be a mild knee sprain, but the image of a blown-out Nike shoe flooding the Internet hasn’t done the company’s image any favors.

Shares of NKE gapped lower last Thursday in the aftermath of the shoe blowout, but once reports began to trickle out confirming that Williamson’s injury would not end his season, investors started moving back into the stock and started pushing it higher once again. This is a great sign that investors like the underlying fundamentals of the stock and are willing to put their money where their mouth is.

Confirming Support at $83

The stock continued to climb higher last week, confirming that the $83 price level that served as resistance for the stock in late August 2018 and support in September 2018 is now serving as support for the stock once again.

Daily Chart of Nike, Inc. (NKE) — Chart Source: TradingView

While we do see some resistance at $86 — based on the high NKE reached last September — we don’t believe the stock is going to drop back below our support before our options expire.

We are looking for the stock to continue consolidating between support at $83 and resistance at $86 as we approach the company’s upcoming earnings announcement on March 21, after market close.

To find out which NKE puts we’re selling — and to get access to our full portfolio of income-generating trades — consider signing up for risk-free trial subscription to Strategic Trader today. 

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of Strategic Trader.

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