The Options Play on Lululemon

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Sept. 4 (Bloomberg) –- Trading Advantage Sr. Market Strategist Scott Bauer discusses his options strategy for Lululemon with Julie Hyman on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Standpoint, but i am looking at this 200-day moving average and there being a real good base but to the upside here over to the upside there is a big gap around $78, meaning that is where the stock fell out of bed last earnings report.

What i want to do going into earnings, again, this is only on a technical basis, i want to structure and options strategy that will let me take advantage of kind of the magnet move if earnings are good, backup to that 78 space.

Walk as through exactly what you're doing.

It is a bit of a complicated trade.

It is really just a butterfly spread.

I'm going to buy a 72.5 strike call in september and sell two of the 77.5 strike calls and buy one of the 80 calls.

It is basically just a butterfly, but it has a bullish bias to it, and upside bias.

In the short option that i have in this trade, which is the 77 point five strike, that would be my optimal area for the stock to go.

I only have to pay about one dollar to do this.

The maximum this can go is five dollars.

My maximum loss, no matter where the stock goes, whether it goes to 100 or zero, is that my dollar investment, but i can make up the value of this would be up to five dollars.

I really like it because i think it is a very cheap upside play.

If we get any sort of good news,

This text has been automatically generated. It may not be 100% accurate.


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