Option Bears Blast Outperforming Lululemon Athletica inc. (LULU)

Lululemon Athletica inc. (NASDAQ:LULU) is lingering in multi-year-high territory

Aug 9, 2016 at 10:37 AM
facebook X logo linkedin

Retail stocks are in focus this week, as a number of notable names report quarterly earnings -- and with retail sales data due on Friday. Today, while yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU) retreats from multi-year-high territory, both calls and puts are seeing accelerated activity in the stock's options pits. Plus, LULU stock's 30-day implied volatility is up another 8.2% at 38.7%, after soaring 25.7% on Monday.

Drilling down on today's action, overall option volume is running at two times what's typically seen at this point, and puts have a healthy lead over calls. However, this put-skewed bias is just par for the course in LULU's options pits. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.42 ranks in the 84th annual percentile, meaning puts have been bought to open over calls at an accelerated clip.

Echoing this is LULU's Schaeffer's put/call open interest ratio (SOIR) of 1.67. Not only does this show that puts nearly double calls among options set to expire in three months or less, but it rests higher than 76% of all comparable readings taken in the past year. In other words, short-term speculators are more put-heavy than usual toward LULU.

While some of this activity could be a result of shareholders protecting paper profits on the outperforming stock, sentiment outside of the options pits is skewed toward the skeptical side, as well. Specifically, short interest accounts for a brow-raising 17.6% of LULU's available float. What's more, it would take almost three weeks to cover these bearish bets, at the equity's average daily pace of trading.

As indicated, though, Lululemon Athletica inc. (NASDAQ:LULU) has been an absolute standout on the charts. Despite today's 0.4% dip that has LULU trading at $78.19, the shares have surged more than 81% since hitting an annual low of $43.14 in mid-November. Plus, the stock tagged $78.96 yesterday -- its loftiest perch since June 2013. Should the shares resume their longer-term uptrend, a capitulation from some of the weaker bearish hands could translate into a fresh burst of buying power for LULU stock.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

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