Dow Jones stock Nike (NKE) headlines the latest earnings calendar, along with Micron Technology (MU), but the two stocks are going in different directions. Nike stock gapped down sharply in December after reporting dismal results, while Micron has rallied sharply in strong volume since the Nasdaq composite and S&P 500 marked follow-through days in early November.

Like a lot of other semiconductor stocks, Micron has been a top performer in the stock market amid improved demand prospects for the company’s memory and storage chips. After five straight quarters of revenue declines, revenue in the November-ended quarter rose 16% to slightly more than $4.7 billion. Micron gapped up and rose more than 8% on the news.

In the earnings release, Micron Chief Executive Sanjay Mehrotra said: “Micron’s strong execution and pricing drove better-than-anticipated first quarter financial results. We expect our business fundamentals to improve throughout 2024, with record industry TAM (total addressable market) projected for calendar 2025.”

Mehrotra went on to say: “Our industry-leading high bandwidth memory for data center AI applications illustrates the strength of our technology and product roadmaps, and we are well positioned to capitalize on the immense opportunities artificial intelligence is fueling across end markets.”

Results are due Thursday after the close. According to analysts polled by Zacks Investment Research, Micron is expected to lose 27 cents a share, with revenue up 44% to $5.33 billion.

Nike Stock On Downtrend
John Donahoe joined Nike as CEO in 2020. Formerly, he was CEO of enterprise software giant ServiceNow (NOW). The stock market liked the news at the time because of Donahoe’s expertise in technology and digital commerce.

The thinking was that Donahoe would accelerate the company’s digital transformation. It’s happening, but Nike has had plenty of growing pains along the way, hurt in part by weak demand from China as well as choppy sales in North America.

Nike stock sold off hard on Dec. 22 after the company reported revenue of $13.4 billion, up 1% year over year. The results marked the fourth straight quarter of decelerating growth. The company also cut its revenue outlook for the full year and announced plans to cut costs by $2 billion over the next three years.

In the November 2022-ended quarter, inventories were up an eye-popping 43%. But the latest quarter showed inventories down 8% to $8 billion. Revenue from China edged up 4% to $1.86 billion, but that was below the $1.95 billion estimate from analysts.

Results are due Thursday after the close. Adjusted profit is seen falling 12% to 70 cents a share, with revenue down 1% to $12.29 billion.

Watching KB Home, Three Retailers
After an earnings sell-off for homebuilder Lennar (LEN) Thursday, attention turns to KB Home (KBH), which reports Wednesday after the close.

At one point Thursday, IBD’s homebuilder group was down 2%, weighed down by higher interest rates. The 10-year Treasury yield spiked 10 basis points to 4.29% after the February Producer Price index showed higher-than-expected wholesale prices. Consumer prices on Wednesday came in above forecasts as well.

IBD’s homebuilder group remains a top-ranked group in market, and KB Home continues to perform well after giving a couple of buy signals on Dec. 1 and Dec. 13. The stock rallied nicely from there, then starting moving sideways while holding support at the 10-week moving average.

KB Home is expected to report a turnaround quarter, with adjusted profit up 8% to $1.56 a share. Look for revenue to be up 5% to $1.45 billion.

In the retail sector, reports are also due from Ollie’s Bargain Outlet (OLLI), Lululemon (LULU) and Five Below (FIVE).

Sellers have been dictating the action in Ollie’s lately as the stock holds just above its 200-day line. Results are due early Wednesday.

Lululemon is only 10% off its high in an 11-week consolidation, but the fast-growing retailer is struggling to get back above its 10-week line. Lululemon reports Thursday after the close.

Finally, Five Below is setting up in cup-with-handle base, but the stock’s relative strength line is lagging badly with a sluggish Relative Strength Rating of 61. Earnings are due Wednesday after the close.

Options Trading Strategy
A basic options trading strategy around earnings — using call options — allows you to buy a stock at a predetermined price without taking a lot of risk. Here’s how the option trading strategy works and what a call option trade recently looked like for Nike stock.

First, identify top-rated stocks with a bullish chart. Some might be setting up in sound early-stage bases. Others already might have broken out and are getting support at their 10-week moving average for the first time. And a few might be trading tightly near highs and refusing to give up much ground. Avoid extended stocks that are too far past proper entry points.

A call option is a bullish bet on a stock. Put options are bearish bets. One call option contract gives the holder the right to buy 100 shares of a stock at a specified price, known as the strike price.

Once you’ve identified a bullish setup in the earnings calendar, check strike prices with your online trading platform, or at cboe.com. Make sure the option is liquid, with a relatively tight spread between the bid and ask.

Look for a strike price just above the underlying stock price — that’s out of the money — and check the premium. Ideally, the premium should not exceed 4% of the underlying stock price at the time. In some cases, an in-the-money strike price is OK as long as the premium isn’t too expensive.

Choose an expiration date that fits your risk objective. But keep in mind that time is money in the options market. Near-term expiration dates will have cheaper premiums than those further out. Buying time in the options market comes at a higher cost.

Nike Stock Option Trade
Nike stock is more than 20% off its high, but when shares traded around 100.50, a slightly out-of-the-money weekly call option with a 101 strike price and a March 22 expiration came with a premium of around $3.85 per contract.

That was 3.8% of the underlying stock price at the time. Based on an at-the-money strike price of 100, Nike’s expected earnings move is 7-8 points up or down.

One contract gave the holder the right to buy 100 shares of Nike at 101 per share. The most that could be lost was $385 — the amount paid for the 100-share contract. To break even, Nike stock would need to rise to 104.85, factoring in the premium paid.