Nike Stock Downtrend: Consider Collar Strategy for Upside and Risk Management
Nike (NKE) stock has been on a downward trajectory since late August, erasing the gains made after its strong earnings report. Investors seeking to participate in potential upside while acknowledging risk may consider a collar strategy, offering a 4.5% upfront payment for a 12.3% upside and a 9.3% downside.
The weekly chart of NKE stock warns of further decline, with the Percentage Price Oscillator (PPO) indicator mirroring a previous significant drop. Despite a recent earnings beat, analysts' price targets vary widely, offering little clarity on the stock's future direction. Even with the recent sell-off, NKE's forward earnings multiple of 41 makes it an expensive stock. Elliott Hill, the current CEO, faces challenges including competition, distribution, and management issues, which have driven the stock down from $180 to $70 in the past four years.
Founded 61 years ago and going public in 1980 at a split-adjusted price of about one-third of a penny, NKE's monthly chart hints at a potential long-term bottom, with the stock recently trading at 2016 levels.
While a collar strategy offers an attractive upfront payment and risk management, NKE's fundamentals and technicals suggest caution. Investors should weigh the potential upside against the risks and consider the stock's history and recent performance.
