Both equities sport attractively priced options, too
Blue-chip Nike Inc (NYSE:NKE) has struggled on the charts in the past week amid broad-market headwinds brought on by escalating U.S.-China trade tensions. However, this pullback could have bullish implications, if history is any guide.
Specifically, the stock's recent drop has put it within one standard deviation of its long-term 10-month moving average. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been 13 other times in the last 15 years Nike stock has made a similar retreat to this trendline, resulting in an average three-month gain of 6.4%, with 77% of those returns positive. At last check, Nike stock was trading at $83.85, so a move higher of similar magnitude would put it around $89.20, a chip-shot from its April 18 all-time high of $90.
Options look to be an ideal vehicle to bet on more upside for NKE, with the security's Schaeffer's Volatility Index (SVI) of 26% ranking in the 26th percentile of its annual range. This indicates short-term options are pricing in relatively low volatility expectations at that time.
There's another athleisure stock flashing a similar long-term signal. Under Armour Inc (NYSE:UAA) is staring at a month-to-date loss of 4.3%, despite last week's blowout earnings report, but this dip has taken the shares to within one standard deviation of their 52-week moving average.
According to White, the three other times that UAA made similar pullbacks to its 52-week moving average in the last 15 years, it went on to average a three-month gain of 12.35% with all three returns positive. At last check, Under Armour stock was trading at $22.40, so a similar jump would put the equity near $25.16 by this time in August, above its Dec. 3 annual high of $24.96.
Under Armour stock's pullback has also taken it to a historically bullish short-term trendline: its 80-day moving average. White's data shows that in the four other times this has occurred in the last three years, the security was up 10.6% one month later, on average, with all four returns positive.
Like its sector peer Nike, Under Armour options are attractively priced, following a recent post-earnings volatility crush. Its SVI of 39% ranks in the 11th percentile of its annual range.