Pre-Earnings Bulls Eye Lululemon Athletica inc. (LULU)

Lululemon Athletica inc. (NASDAQ:LULU) slipped 1.3% yesterday, but that didn't prevent options traders from targeting calls. In fact, the contracts crossed at a 25% mark-up to the average daily rate. Plus, the stock's 30-day at-the-money implied volatility rose 3.7% to 54.7%, signaling elevated demand for short-term strikes.

Diving right in, LULU's most active option on Monday was the January 2015 47.50-strike call, where close to 2,500 contracts changed hands. Nearly three-quarters did so at the ask price, and open interest added 1,264 contracts overnight, suggesting freshly bought bullish bets. In a nutshell, these speculators believe shares of the yoga apparel maker will topple $47.50 by the close on Friday, Jan. 16, when the back-month options expire.

On the technical front, however, it's been a rough year for LULU, which is down nearly 24% to rest at $44.93. What's more, the company will step into the earnings confessional Thursday morning, and historically, the shares haven't fared well in the aftermath of these events. Following LULU's last eight turns under the spotlight, the shares have averaged a loss of 2.7% in the subsequent session -- including a nearly 16% fall after June's report. Given these facts, it's possible some of yesterday's call buyers were short sellers setting up hedges to protect against an unexpected post-earnings rally; after all, nearly 21% of the equity's float is sold short.

This morning, though, "vanilla" option bulls received some good news, as Wells Fargo upgraded Lululemon Athletica inc. (NASDAQ:LULU) to "outperform" from "market perform." As a result, the stock is pointed almost 2% higher ahead of the bell.