Adidas stock may have dropped some 15% so far this year but options traders are betting the upcoming World Cup soccer tournament will help the sporting goods giant recover.
Adidas traders hold more bullish options than bearish ones. There were 95,424 calls outstanding on 24 March, compared with 83,399 puts, while five of the six most-owned contracts were bullish, Bloomberg data showed.
Calls betting on a 13% jump in stock price to €88 by June, from around €78 currently, had the largest open interest among bullish wagers, the data showed.
Adidas and FIFA, the organiser of the soccer World Cup, have extended a commercial relationship to 60 years. That has fuelled optimism, according to Jean-Paul Jeckelmann, chief investment officer of Banque Bonhote & Cie.
However, Trung-Tin Nguyen, a Zurich-based hedge-fund manager at Trimax Capital, believes Adidas optimism should be tempered by the backdrop of the Ukraine crisis.
Adidas's stock has dropped as tensions between Russia and the West over Ukraine escalated.
Russia is Adidas's third-largest market worldwide, according to company spokeswoman Katja Schreiber, who refused to comment on the options trading.
"I'd like to know who's so bullish while the outlook is so muted," Nguyen.
"There's a foreign-exchange risk, and the company's sales exposure to Russia does intensify that issue. While the World Cup could be a trigger, it's more of a hype than anything else, and the revenue resulting from it may well be overestimated," Nguyen added.
Adidas is competing against Nike, the world's largest sporting goods retailer, for domination in soccer. The German firm has said sales from soccer would rise to a historic high of €2bn (£1.6bn, $2.7bn) this year.
The 2014 soccer World Cup tournament, where Adidas is supplying the official match ball and uniforms to eight teams, begins on 12 June in Sao Paulo.
"With the significant drop we've seen this year, investors see it as a good entry level before the significant FIFA World Cup event in Brazil," said Bismark Badilla, a fund manager at Lexinta, where he manages assets worth $300m.
"Not only will the company be in the news cycle at least through the second quarter of 2014, but it may also provide a boost to profit and revenue. There's positive surprise potential after the company's lower outlook," Badilla told Bloomberg.
"Investors are shrugging off the negative news and are focusing on June, when it's just going to be soccer, soccer, soccer.
"The sector tends to do well going into the main competitions. That should help the stock," Jeckelmann, who helps manage $1.5bn in equities, said on 24 March.
Earlier, Adidas's earnings forecast fell short of market estimates. Adidas cited weakness in currencies such as the Russian rouble and Argentine peso as reasons behind the performance outlook.
Profit this year is expected to hover between €830m and €930m and chief executive Herbert Hainer has said turmoil in Ukraine posed a further risk to the business.