Lululemon Athletica has fallen hard, but one investor apparently
thinks that the stock is a survivor.
optionMONSTER's tracking programs detected the sale of 3,000 June
60 puts today, most of which priced for $6.15. Volume was almost
triple open interest at the strike, indicating that new positions
is now on the hook to buy shares in the yoga-apparel stock for $60
through expiration in mid-June no matter how far they may fall by
then. Above that level the contracts expire worthless, and the
trader would keep the $6.15 as profit.
The investor can still make money below it because of the credit
received today. In fact, including that $6.15, the effective entry
price would be $53.85, well below the stock's current level. (See
LULU is up 0.2 percent to $59.28 in morning trading. It peaked over
$80 in June and fell sharply on Dec. 12 after issuing weak sales
guidance for current fiscal quarter. Management cited problems in
the supply chain and increased competition.
Nonetheless, shares have been stabilizing since the drop and are
now back above their 10-day moving average, which could make some
chart watchers think that the worst of the selling is done for now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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