Nike Plunges 2.36%—Is This the Start of a Deeper Correction?

Summary
• NKE trades at $74.87, down 2.36% from its previous close of $76.68
• Intraday range of $74.45 to $76.37 shows sharp volatility
• Jim Cramer’s layoff speculation and bearish earnings outlook drive sell-off

Nike’s sharp intraday drop has drawn attention as the stock tests key support levels amid a bearish earnings outlook and strategic overhauls. With the Apparel sector showing mixed momentum and Under Armour trailing the slide, traders are scrutinizing technical setups and options chains for directional bets. The stock’s 52-week range of $52.28–$90.62 suggests ample room for volatility, but today’s move has raised red flags about near-term execution risks.

Bearish Earnings Outlook and Layoff Speculation Spur Sell-Off
Nike’s 2.36% intraday plunge reflects investor unease over a deteriorating earnings outlook and strategic uncertainties. The Zacks Rank model assigns a 'Sell' rating to NKE due to downward revisions in consensus estimates and valuation pressures. Earnings forecasts for FY2025 show a 22.7% decline to $1.67 per share, while FY2026 projections hint at a 55% rebound but remain clouded by execution risks. Analysts highlight near-term challenges including tariffs, competitive pressures, and soft consumer demand. Jim Cramer’s recent comment on potential layoffs further dented confidence, compounding concerns about operational overhauls under the 'Win Now' strategy.

Apparel Sector Mixed as Under Armour Trails Nike’s Slide
The Apparel, Accessories, and Luxury Goods sector is showing mixed momentum, with Under Armour (UA) down 1.1% as of 15:21 ET. While Nike’s drop is steeper, the sector’s broader struggles—driven by global demand shifts and cost pressures—highlight structural headwinds. Nike’s premium valuation (Zacks Value Style Score of D) contrasts with peers, amplifying near-term sell-offs despite long-term brand strength. Rivals like lululemon and Adidas are cautiously expanding wholesale channels, but Nike’s focus on segmenting its wholesale business by sport and price point remains unproven.

Play the Volatility with Precision: NKE20250808P73 and NKE20250808C77
• MACD: 2.82 (bullish), Signal Line: 2.80 (neutral), Histogram: 0.018 (slight bullish divergence)
• RSI: 56.39 (neutral, not overbought or oversold)
• Bollinger Bands: Current price ($74.87) near lower band ($70.58), suggesting oversold territory
• 200D MA: $70.78 (below current price), 30D MA: $71.31 (near-term support)

Nike’s price is testing critical support near the 200-day moving average and lower Bollinger Band. A break below $71.31 could trigger deeper bearish momentum. For options, focus on the NKE20250808P73 (Put) and NKE20250808C77 (Call), both with strong liquidity and volatility profiles.

• NKE20250808P73 (Put)
- Strike Price: $73, Expiry: Aug 8
- IV: 28.52% (moderate), Leverage Ratio: 129.08% (high), Delta: -0.2746 (moderate bearish exposure), Theta: -0.0058 (low decay), Gamma: 0.0994 (high sensitivity), Turnover: 158,006 (high liquidity)
- Why it stands out: High leverage and gamma make this put ideal for capitalizing on a 5% downside move (projected price: $71.13). Payoff: max(0, $71.13 - $73) = $0 if price falls below $73, but gamma amplifies gains as the price drops.

• NKE20250808C77 (Call)
- Strike Price: $77, Expiry: Aug 8
- IV: 29.30% (moderate), Leverage Ratio: 126.89% (high), Delta: 0.2823 (moderate bullish exposure), Theta: -0.1168 (high decay), Gamma: 0.0981 (high sensitivity), Turnover: 162,173 (high liquidity)
- Why it stands out: High leverage and gamma position this call to benefit from a rebound above $77, which aligns with the 30D MA. Payoff: max(0, $71.13 - $77) = $0 in a 5% downside scenario, but gamma cushions losses if the price stabilizes.

If $73 breaks, NKE20250808P73 offers short-side potential. Aggressive bulls may consider NKE20250808C77 into a bounce above $77.

Backtest NIKE Stock Performance
Nike (NKE) has historically shown a mixed performance following a -2% intraday plunge. The backtest data reveals that such events have occurred 622 times over the past five years, with a 3-day win rate of 48.71%, a 10-day win rate of 49.84%, and a 30-day win rate of 48.87%. However, the average returns over these periods are relatively low, with a 3-day return of 0.00% and a 10-day return of 0.03%, indicating that while there is a decent probability of a positive rebound, the magnitude of the return is generally modest.

Aggressive Bulls Target NKE20250808C77, Bears Eye NKE20250808P73
Nike’s near-term trajectory hinges on its ability to stabilize earnings expectations and counter bearish sentiment. A breakdown below $71.31 (30D MA) could trigger a retest of the 52-week low ($52.28), while a rebound above $77 may reignite confidence. Investors should monitor Under Armour’s price action (currently down 1.1%) as a sector benchmark for broader apparel sentiment. For now, the NKE20250808P73 put offers a high-leverage, high-gamma play on a 5% downside move—execute decisively if $73 breaks.