Nike Inc (NYSE:NKE) and Micron Technology (MU) earnings reports are scheduled as businesses prepare to close their books for the third quarter. The price of Nike shares dropped below the 100 mark on Thursday due to supply chain snarls, mounting stockpiles, and sluggish Chinese sales.

IBD Stock Checkup’s Composite Rating for Nike Inc (NYSE:NKE) stock is 45, resulting from this year’s dismal price performance and deteriorating fundamentals. Thursday night’s closing requires results.

In light of recent quarters’ sluggish sales growth, Micron stock is also declining. Early in August, Micron warned that the upcoming quarter’s sales would be $7.2 billion, far less than the $9 billion consensus expectation.

The leading manufacturer of memory chips for computers and smartphones, Micron, has announced plans to cut back on capital expenditures for new factories, claiming that these expenditures will be “down substantially” from the previous year.

Also reporting late on Thursday is Micron. According to the Zacks consensus estimate, adjusted earnings will be $1.42 per share, down 41% from last year’s period. It is anticipated that revenue will drop 16% to $6.94 billion.

Nike Inc Stock Performance

Nike Inc (NYSE:NKE) stock had down 41% year to date on Thursday, while the S&P 500 had fallen by 21%. On Thursday, Nike stock displayed harmful technical activity by closing below its low of 99.53 on July 1 amid another stock market slump.

On June 28, when the business announced an adjusted profit of 90 cents a share, down 3%, investors drove Nike Inc (NYSE:NKE) shares down by 7%. The amount of revenue fell by 1% to $12.2 billion.

News that China’s sales plummeted 19% to $1.56 billion due to lockdowns alarmed investors. It didn’t help that inventories increased significantly by 23% to $8.4 billion. To $5.11 billion, sales in North America decreased by 5%.

The adjusted profit for the upcoming quarter is predicted to be 93 cents a share, down 20%, with sales rising by less than 1% to $12.33 billion.

Egg producer Cal-Maine Demonstrates Relative Strength In the stock market, Cal-Maine Foods (CALM) is unusual since it is still up after clearing a cup-and-handle base with a 57.85 purchase point.

Cal-Maine reports rapid revenue growth for four consecutive quarters. No sales projection has been provided for the current quarter, although CALM is anticipated to have an adjusted profit of $2.40 per share, reversing a loss from the prior year. Tuesday night’s close requires results.

According to a MarketSmith forecast, the company’s full-year earnings would increase by 114% in its current fiscal year, 2023, before declining 67% in fiscal 2024.

On Wednesday, before the market opens, Cintas (CTAS) and Paychex (PAYX) release earnings. Both have impressive Composite Ratings thanks to a history of steady expansion.

Recently, the manufacturer of uniforms, Cintas, appeared to be about to emerge from a deep double-bottom base. However, the stock market’s downturn delayed it. On September 16, Cintas put up a good fight at its 200-day moving average, but support broke down on Thursday.

Since at least 2017, Cintas has shown yearly profits improvements, contributing to its Earnings Stability Rank of 6. (on a scale of 1-99, with one being the best).

Additionally, Paycheck has a stellar Earnings Stability Rank of 5. Paychex, meanwhile, has fallen below its 200-day line following numerous higher-volume drops after forming the right side of a cup base in light volume. The pattern has a handle that is deeper than usual.

In a competitive market, the supplier of human resources, benefits, and payroll outsourcing services is nonetheless seeing strong growth. A 9% increase in sales to $1.18 billion is anticipated, with an increase in adjusted profit to 97 cents per share. The yearly dividend yield for Paychex is about 2.7%.

Trading Strategy for Options

You may purchase a stock at a fixed price without taking on much risk if you use a simple options trading strategy centered around earnings and call options. The options trading technique functions as shown below.

First, look for stocks with a bullish chart that is highly regarded. Some establish themselves on reliable early bases. Others may have already made a breakthrough and are now receiving assistance at their 10-week lines. Some may be holding their positions close to highs and not giving up much ground. Although Nike Inc (NYSE:NKE) stock is still far from its highs, many adverse developments may already be included in its price. Avoid equities that are too far past their entry points and are stretched.

Watch prominent equities in the stock market surge as IBD specialists on IBD Live analyze them.

A call option is a bullish wager on a stock in the options market. Bullish bets are put options. The owner of a call option contract has the right to purchase 100 shares of a stock at a predetermined price.

Put options are for underachievers with negative charts. The main distinction is close to the cost of the underlying stock. The right to sell 100 shares of a stock at a specific fee is provided by a put option. With a put option, you benefit when the stock price declines below the strike price.

Examine Strike Prices

Check striking prices on your online trading platform or at cboe.com once you’ve discovered an earnings scenario for a call option, such as FedEx stock. Make a choice active and narrowly spread between the bid and the ask. Check the premium and look for a strike price above the underlying stock price (out of the money). The compensation should not exceed 4% of the underlying stock’s current price. An in-the-money strike price is acceptable in some circumstances if the premium is reasonable.

Pick an expiry date that matches your risk goal. But bear in mind that in the options market, time is money. Premiums will be less expensive for short-term expiration dates than for longer-term ones. The cost of purchasing time on the options market is higher.

You may profit from a positive earnings report with this options trading approach without taking too much risk. The cost of the option is equal to the risk. The contract’s purchase price is the highest that may be lost if the stock goes down on earnings.

Traded Nike Stock Options

A call option can make sense for investors who believe that Nike Inc (NYSE:NKE) stock has already been priced to reflect a lot of bad news.

A weekly call option with a strike price of 99 and an October 7 expiration came with a premium of roughly $4.10, or about 4.2% of the underlying stock price at the time; Nike Inc (NYSE:NKE) was around 98.50.

One contract allowed the bearer to purchase 100 shares of Nike stock for $99 each. $410, the cost of the 100-share contract, was the highest that might be lost.

Nike would need to rise over 103.10 after accounting for the premium paid (99 strike price plus $4.10 dividend per contract) for the trade to start turning a profit.