The athleisure retailer reports first-quarter earnings after tomorrow's close
Athleisure retailer Lululemon Athletica Inc (NASDAQ:LULU) will join Macy's (M) in the earnings confessional tomorrow, announcing first-quarter results after the close. Last seen down 1.3% at $332.20, LULU is trading its lowest level since March and pacing for its eighth straight daily loss, as it pulls back from a May 8, one-year high $389.06. The shares are also slipping below long-term support at the 100-day moving average, but still sport a 13.4% year-over-year lead.
Options traders are already placing their bets, with 16,000 calls across the tape so far, which is six times the intraday average volume, compared to just 5,472 puts. The most active contract is the weekly 6/9 405-strike call, with new positions being opened there.
This optimism has been the norm for quite some time. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.21 sits in the 92nd percentile of annual readings.
The equity has tended to move higher the day after its earnings report, if the last two years are any indication. In fact, Lululemon Athletica stock finished five of its last eight next-day sessions higher -- including a 12.7% pop back in March -- and averaged a move of 7.3%, regardless of direction. This time around, the options pits are pricing in a bigger-than-usual swing of 11.5%.