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Lululemon Athletica inc. (NASDAQ:LULU) options are in high demand ahead of the company's turn in the earnings confessional tomorrow morning. Just yesterday, the stock's 30-day, at-the-money implied volatility spiked 5.3 percentage points, or 10.2%, to 57.1% -- near a year-to-date high. Meanwhile, the equity's Schaeffer's Volatility Index (SVI) has skyrocketed to an annual high of 74%, from an annual low of 27% just over a month ago, suggesting LULU's short-term options are expensive right now, on a historical basis.

Calls have been the options of choice on the yoga apparel maker. During the past two weeks, speculators have bought to open almost twice as many LULU calls as puts on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resulting 10-day call/put volume ratio of 1.82 stands higher than 88% of similar readings of the past year, pointing to a healthier-than-usual appetite for bullish bets over bearish.

As a result, the stock's Schaeffer's put/call open interest ratio (SOIR) has slumped to 1.00 -- in the 19th percentile of its annual range. In other words, near-term option players are more call-biased than usual at the moment.

The out-of-the-money September 77.50 call is most popular, with almost 14,900 contracts outstanding. In fact, more than half those calls were opened within the past 10 sessions. With LULU currently lingering just north of $70, it would take a short-term rally of more than 10% in order for the calls to move into the money. Currently, delta on the calls is 0.22, implying a less than 1-in-4 shot of an in-the-money finish.

It's worth noting that short interest soared 10.8% during the past two reporting periods, and now accounts for 15.6% of LULU's total available float. Furthermore, it would take close to 12 sessions to repurchase all of these pessimistic positions, at the stock's average pace of trading. As such, it's possible that short sellers are hedging their bearish bets with out-of-the-money calls, in order to limit losses in the event of a serious post-earnings surge.

Historically speaking, LULU has topped analysts' bottom-line earnings estimates in each of the past seven quarters. Nevertheless, the stock averages a loss of 3.4% in the week after earnings, and dropped 17.5% the day after its last turn in the earnings spotlight. Presently, Wall Street is expecting a per-share profit of 35 cents for LULU's second quarter.

Speaking of Wall Street, analysts are wary of Lululemon Athletica inc. (NASDAQ:LULU), which has spent the past few weeks trapped between its 10-week and 20-week moving averages. At present, 16 out of 26 brokerage firms offer up "hold" or worse suggestions. Should LULU defy recent earnings history and break north of its current range, a round of upgrades -- or a short-squeeze situation, for that matter -- could translate into a contrarian boon for the shares.

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