Don't Miss This Rare Lululemon Stock Buy Signal

Front-month implied volatilities are low on LULU options

Mar 2, 2018 at 1:07 PM
facebook X logo linkedin


Shares of Lululemon Athletica inc. (NASDAQ:LULU) bottomed at an annual low of $47.26 back in May, but have been soaring on the charts ever since -- up almost 73%. What's more, LULU stock topped out at a record high of $83.59 on Tuesday, and were last seen trading not far from here at $81.17. And with earnings not due until late March, it could be a prime time for options traders to bet on a short-term bounce for the shares.

Lululemon's Schaeffer's Volatility Index (SVI) is currently docked at 30% -- in the 8th percentile of its annual range. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times since 2008 that LULU shares were trading near 52-week highs, while front-month implied volatilities were so low. This resulted in an average one-month gain of 4.44% for the retail stock. Another move of this magnitude would put the security near $84.75 for the first time ever.

What's more, LULU call options are remarkably cheap compared to their put counterparts, even with the stock's impressive technical backdrop. Trade-Alert pegs the equity's 30-day implied volatility skew at 10.8% -- in the elevated 82nd annual percentile.

And contrarian traders can take heart in the fact that there's still plenty of skepticism priced into this outperforming retail stock. Of the 25 analysts covering Lululemon Athletica shares, 11 still maintain a lukewarm "hold" rating. Plus, the average 12-month price target of $83.56 is within a chip-shot of current trading levels. This leaves the door wide open for a round of upgrades and/or price-target hikes to draw more buyers to LULU's table.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI