What's going on?

Shares of American sportswear company Under Armour rose 6% on Tuesday after the company reported a quarterly profit that was stronger than expected.

What does this mean?

Back in December, Under Armour�s investors were woefully disappointed by its financial targets � and sent the stock down 10%. That was particularly due to the company predicting revenue growth in the US (where it makes almost three quarters of its sales, according to FactSet) would slow faster than previously thought.


Last quarter, however, Under Armour benefited from surprisingly strong demand for some of its most popular sneakers. That meant it was able to reduce discounting overall � online price markdowns were reportedly 10-20% lower than the year before � and exceed profit predictions.

Why should I care?

The bigger picture: Nike and Adidas still run the game.

Under Armour�s revenue growth in Europe and Asia topped 30% last quarter, picking up the slack in North America, where revenue fell a lame 6% (tweet this). Compared to global rivals Nike and Adidas, whose American revenues grew, respectively, 9% in the three months to November and 16% in the third quarter, Under Armour has reason to greave. Investors might be fretting that the upstart responds by pricing its products under those of rivals, which could mean a return to heavy discounting � and lower profits.

For markets: It�s a good idea to weigh the options.

Investors� buying of �options� on individual stocks � investments which give holders the right to buy or sell shares at a given price on a future date � can offer clues to how a stock�s price might move. According to Bloomberg, the number of Under Armour �calls� � options that give the holder the right to buy shares � exceeded the number of �puts� � which give holders the right to sell � ahead of the company�s results. Furthermore, analysis of the set prices involved suggested Under Armour�s stock would move as much as 13% depending on the strength of its results.