Options Trading News

April 23, 2013  Tue 3:47 AM CT

Lululemon Athletica has erased all of its recent losses, and one trader is betting on a floor beneath its shares in coming months.

optionMONSTER's tracking systems detected the sale of 2,600 June 62.50 puts in one print for $1.70 yesterday. The volume was above the strike's open interest of 1,552 contracts before the session began, indicating that this is a new position.

The put seller is looking for LULU to stay above $62.50 through expiration in mid-June. The trader will face the obligation to buy the stock if it falls below that level, though at an effective price of $60.80 once the credit from the put sale is included. (See our Education section)

LULU surged 8.06 percent yesterday to $73.89. The athletic-wear retailer declined from above $70 to the $62 level in March after a poor earnings report and continued fallout from the widely publicized recall of its yoga pants, but the stock has recovered all of that ground this month.

The company, which saw bullish call buying last week, has not yet scheduled its first-quarter earnings report. Total option volume in the name was 6 times its daily average yesterday.
Share this article with your friends


Premium Services

Education & Strategy

Investor deficiency in premium collection

Most investors have heard about selling options as a form of income generation. You hear it from brokers and financial advisors as a way to generate income without selling off pieces of your nest egg, dwindling through your retirement accounts, and then being stuck figuring out how to financially afford the rest of your life...

View more education articles »