A large trade is betting that Lululemon Athletica is ready to
optionMONSTER's Heat Seeker monitoring system detected the purchase
of some 5,000 June 85 calls for $2.09 and the sale of a matching
number of June 90 calls for $0.89, resulting in a net cost of
$1.20. Volume was below open interest at the lower strike, so there
are two possible explanations for the trade.
One is that the investor owns shares of the yoga-apparel company
and had sold the 85s as part of a
strategy. In this scenario, he or she then bought those back and
sold the 90s, raising by $5 the level at which they must sell the
Alternatively, both halves of the trade may have been opened, in
which case it is a
bullish call spread
with a maximum profit of 317 percent. (See our
LULU is up 4.54 percent to $78.47 in morning trading. The stock
appreciated some 2,000 percent between 2009 and early last year but
has been consolidating since. It's been holding below key
resistance at $80 during that time, and today's option trade is
looking for it break that level.
The transaction also positions for strong fiscal first-quarter
results, which will probably occur early next month, based on last
Total option volume is slightly above average in the name so far
today, with calls accounting for almost 60 percent of the
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