NKE Showed How to Profit from Earnings Trades

By Brandon Chapman, CMT

Nike reported stellar earnings. Beat by 43%. 

Stock crashed anyway.

Most traders watching CNBC scratched their heads. The Ghost Prints community walked away with 140% overnight.

You know earnings trades have massive potential. And they show up again and again. 

But this trade made 140% overnight. It was easy to spot if you knew where to look.

Many members told me they caught this trade. 

One member said the console paid for itself in a single win.

👉 SEE THE EXACT SIGNALS IN THE REPLAY →

I want to show you what you can learn from this, and how you can be ready for the next big trade. 

Let’s walk through the progression.

The Setup

On Tuesday at 3:38 PM, right before the close, someone made a bet. Not a small one. 7,200 put contracts at the $64 strike. Nike was trading around $66. Earnings were scheduled for after the close on Wednesday.

This wasn't speculation on bad numbers. This was institutional capital positioning for downside. The kind that knows market maker hedging dynamics create self-fulfilling pressure.

It was one of several put option prints. One massive signal. The timeline had begun.

The Pressure Builds

The day of earnings brought more conviction. Another 8,360 puts at the $60 strike. Price paid: $0.36 per contract.

Combined with Tuesday's activity, over 20,000 put contracts accumulated in two days. Between the $64 and $60 strikes. All bought, not sold. All positioned for downside before Nike's after-hours announcement.

Market makers selling those puts had to hedge. They had to short stock. 

Based on the chart, that should be no big deal. There was a nice uptrend in place. 

But the gamma mechanics were building massive downside pressure beneath the surface. 

Price hadn't moved yet. But the trap was set.

The Trade - Navigating Volatility Skew

Here's where most traders would have stumbled. 

To get this trade right, you had to pay attention to Skew. That might sound like black magic, but it is really just the difference in implied volatility across multiple strikes.  

If implied volatility is getting higher as the strikes go further out of the money, that means something. Something we have to pay attention to.

It’s like the difference between the cost of premium brand ice cream and the store-brand stuff. At some point, you’re going to simply say “no” to your favorite Ben and Jerry’s flavor no matter how good it is. Price matters.

Nike's volatility skew was brutal. Implied volatility sat above 130%. Put verticals were mispriced. Buying one strike and selling another meant paying too much for the long side and getting too little for the short side.

The solution: a butterfly spread that neutralizes skew.

Structure:

• Buy the $63 put

• Sell two $61 puts

• Buy the $59 put

Cost: $0.25 for a $2 wide butterfly. Maximum profit potential: $1.75. Risk clearly defined. Target clearly identified.

This wasn't about betting on catastrophic collapse. This was about positioning for a move to $61, right in line with the expected move and the institutional put strikes.

Executed Wednesday afternoon. One day to expiration. Classic earnings butterfly timing.

Thursday Morning - Reality Hits

Nike reported after the bell Wednesday. The numbers looked good. $0.53 per share versus $0.37 expected. A massive beat.

Thursday's opening price: $59.

Turns out investors don’t like it when you sell 21% fewer shoes in your second biggest market, and admit you don’t have a solution in mind. 

The stock gapped down seven dollars despite beating earnings. The gamma effect in full force. Market makers who sold those 20,000 puts had to hedge aggressively. That hedging created selling pressure that overwhelmed any positive earnings sentiment.

The butterfly spread opened inside its profit zone. Price bounced from $59 to $60.35 as the morning progressed. Time to exit.

Closed at $0.63. From $0.25 entry. 140% overnight return.

The Lesson - Magnitude Over Direction

This trade teaches something critical about Ghost Prints. They don't predict earnings results. They reveal positioning that creates magnitude when price moves in the gamma direction.

Micron reported the same week. Crushed earnings estimates by $1.30. Stock moved exactly one times the expected move higher. No gamma pressure. No acceleration.

Nike beat earnings. Moved greater than one times expected move lower. Gamma pressure amplified the downside.

The prints gave us four things:

1. Symbol: Nike

2. Direction: Downside bias from massive put accumulation

3. Target: $60-64 strike zone

4. Timeframe: Through Friday expiration

The trade structure handled the rest. Butterfly spread neutralized the volatility skew problem. Risk stayed small at $0.25. Profit potential stayed asymmetric at 7:1.

What This Means For Your Trading

Ghost Prints aren't magic. They're mechanics. When institutions accumulate 20,000 put contracts before earnings, market makers create downside pressure through hedging. If earnings disappoint or even just fail to exceed elevated expectations, that pressure accelerates the move.

You don't need to predict the earnings result. You need to position for the amplified move if it develops in the gamma direction.

The Nike case study shows this perfectly. Good earnings. Bad reaction. Ghost Prints revealed the positioning two days early. The butterfly spread captured the move with defined risk.

Most traders read headlines after the fact and wonder what happened. Ghost Prints members saw it building in real-time and positioned accordingly.

The difference between watching and participating starts with seeing what institutions are doing before the crowd catches on.

Learn how to identify these setups in real-time with the Ghost Prints Console.

Brandon Chapman, CMT
Creator of Ghost Prints