Earnings Lift Lures Lululemon Athletica inc. (LULU) Option Traders

Lululemon Athletica inc. (NASDAQ:LULU) is rallying on an earnings beat and a strong outlook

by Alex Eppstein

Published on Jun 9, 2015 at 11:00 AM
Updated on Jun 24, 2020 at 10:16 AM

Lululemon Athletica inc. (NASDAQ:LULU) is dashing the hopes of recent option bears, surging 6% to flirt with $65.21 on an upbeat earnings report and upwardly revised guidance. This isn't lost on traders, who are exchanging options at a rate nine times what's expected at this point in the morning.

A number of bullish speculators are rolling the dice on end-of-week upside for LULU, buying to open the weekly 6/12 66.50-strike call. However, slightly longer-term traders are counting on a pullback by next week's close, buying to open the front-month June 63 put.

Historically speaking, puts have definitely been the options of choice at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past 10 weeks across these exchanges, LULU has racked up a put/call volume ratio of 1.00 -- higher than 94% of all other comparable readings taken in the previous year.

Short selling has been popular, as well. Over 12% of LULU's float is sold short, representing 11.3 days' worth of pent-up purchasing power, at the stock's typical trading levels.

Both option bears and shorts could be feeling the heat today, with Lululemon Athletica inc. (NASDAQ:LULU) sharply higher. In fact, the shares now sport a year-to-date gain of nearly 17%.

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