If the Shoe Fits NKE Classic Pattern

The Markets have settled down for now but even on quiet days there's huge gains to be made

UVXY settled down to a recent low and the major market ETFS were modestly higher with no discernable patterns. A look through the Dow 30 stocks on lower time frames revealed a similar outcome, however in the daily chart one Dow 30 stock stood out with a classic pattern, NKE.

 

The  Chart below clearly shows a classic V-shaped double bottom and MACD divergence up. It's on a daily chart so options will take a few days to pan out, unlike a 10-minute pattern where it's done and dusted in a couple of hours or so.

 

 

August 6th, the next trading day the NKE 78 calls expiring August 16, 2024 were available for under 10c, this allows 9 trading days. Clearly you could have looked at an option expiring 4 days later on August 9, and made some modest gains, but for the pattern to fully unwind more time is needed.

 

Think of it like this, if this were a 10-minute time frame divergence on SPY on August 6 and you bought OTM options expiring in 40 minutes, the pattern would need to unwind rapidly.

 

The chart below shows how this trade panned out. 10c to $1.40 in 5 days. Be aware of the volume when trading weekly options on stocks like this while they are still out of the money, lower volume will mean wider spreads on entry. Exiting once the move occurred was much easier.

 

 

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