Options traders are banking on a huge relocation for Lululemon as the athleisure business get ready to report quarterly outcomes after the bell Thursday.
Lululemon is generally accountable to move a fair bit after revealing profits, balancing 5.8% in either instructions throughout its last 8 reported quarters. This time, nevertheless, the agreement amongst choices traders appears to be that the stock might almost double that.
“Lululemon options traded very actively today, nearly three times the average daily volume, and because of the wreckage that we’ve seen out of retail stocks recently, options prices have been bid up substantially,” Options Play’s primary strategist, Tony Zhang, stated Wednesday on CNBC’s “Fast Money.”
“The choices market is presently indicating a 9.3% relocation [in either direction] entering into this profits occasion, versus the average we have actually seen over the previous 8 quarters of just 5.8%.”
While the choices market at big is banking on a considerably above typical relocation, one trader is benefiting from high premiums, and is taking the opposite of that bet.
“[They’re] selling 400 agreements of the June 215/360- strangle, gathering about $3.14 That’s a truly broad strangle here, since this is a technique that will pay as long as Lululemon is someplace in between $212 and $363 That’s about a 25% trading variety around where it closed today,” stated Zhang.
On the front end, this trader is gathering about $125,000 in premium, with a responsibility to purchase 40,000 shares of Lululemon if the stock rate exceeds either strike rate because strangle by June expiration.
Luluemon was up more than 2% in Thursday’s session.
Disclaimer
