Lululemon has been crushing it. My wife and girls have so many LULU outfits. They not only wear them for working out but they wear them all the time everyday and all day.
LULU has jackets as well as active apparel and even purses and accessories now.
They have Men’s clothes too. And yes, I do have some….my wife bought them for me……..
But I have to admit, they do fit very well and I like the way they look too.
In today’s video I am going to show you step by step how to make an easy earnings option trade in LULU this week and make a quick $360!
Be sure and watch all the way to the end and we will answer the questions:
- Why is now the right time for an Iron Condor option trade in LULU?
- Is LULU a good company poised to skyrocket or drop since it is near all time highs?
- How do we sell an Iron Condor option in LULU on the option trading platform?
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Hey guys, Darren here. We have a video for you here today.
But first, if you appreciate the time and effort that goes into doing the research and making these videos all I ask is one thing. Please do me a favor and hit the like and subscribe buttons real quick to help get this video out to more people. I really appreciate it and it helps ou the channel tremendously. So thank you very much.
I think it’s important that we understand all the different strategies and ways that the rich are getting richer. So that we can have the tools to do the same and do better for ourselves in any market while doing it safely.
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Be sure to download the FREE options Workshop in the link below.
It talks about the two main benefits of trading options over buying stocks.
DISCLAIMER, I am not a financial planner and I am not recommending trades. Please do your own research and if you are new or learning options, I recommend you start small.
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Why is now the right time for an option trade in LULU?
Guys, everyone wants to look good, right?
Lululemon designs, distributes, and retails athletic apparel, footwear, and accessories for women and men. It operates in two segments, Company-Operated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for healthy lifestyle, such as yoga, running, training, and other activities. It also provides fitness- inspired accessories and footwear.
Guys let’s take a look at a Chart going back to 2020 in LULU. As you can see it is up around $460 near the all time highs. So it is basically priced for perfection right now and wil pretty good reason.
Looking at LULUs income statement we see that Revenue has been consistently growing year over year for the past several years.
And the Balance sheet is clean too with Assets increasing while keeping liabilities in check as well.
So in wanting to place an earnings option trade in LULU, it would be good to know if the stock is going to move up or down after earnings is announced on Thursday December 7th after the close, right?
In other words,
Is LULU a good company poised to skyrocket or not?
In this article by Zacks they estimate 3rd Quarter sales to come in at $2.2B a 17.8% increase Yr over Yr. The consensus estimate is only a 13.5% rise. So they are saying that LULU will beat earnings.
Investors Business Daily also predicts good numbers from LULU. However they point out that it likely will still be 3 straight quarters of slowing sales growth.
So it seems like LULU has a good chance to beat the estimates on earnings and revenue. However, how is the stock price going to react?
I’m sure LULU will talk about forward guidance on the conference call and other items as well.
Since LULU is already near all time highs I think it is almost priced for perfection and any bad news could bring it down.
On the other hand, inflation is starting to finally level off and Christmas is coming where LULU will do well. It’s online sales and technology are very good as well..
So I am going to trade both sides but skew the trade to the downside since LULU is already near highs so I am not too concerned about it skyrocketing to the upside.
So,
How do we sell an Iron Condor in LULU on the option trading platform?
We are using the Tastytrade option trading platform. You can do this on any option trading platform.
However, Tastytrade is one of the best and most intuitive for trading options.
These are the guys that developed the TOS Think or Swim Option trading platform and then sold it to TD Ameritrade. TD and Schwab use that platform still to this day.
Tastytrade is even better.
Use the link below and you can get cash back when you open an account. You can open an account with any amount. However, I do recommend that you open with around five thousand dollars so that you can place several different trades.
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Punch in LULU in the upper left while on the trade page and the option chains will pop up.
We see that LULU is currently trading at $459 and the IVR Implied Volatility Rating is a huge 53. This means that the option prices are high and it is due to the fact that it is just prior to the earnings release this Thursday. Volatility is high because the price is more likely to make a larger move than typical.
After earnings volatility will drop so we want to sell options in the current high volatility environment. And then hopefully buy them back for less $’s after the earnings event.
Let’s click and open the Dec 15th chain since it is the regular monthly option chain and just 10 DTE Days to Expiration.
Click on the Bid to SELL the 425 Put option and Ask to buy the 415 option. We collect $1.68 for selling this option which is really $168 since 1 option contract controls 100 shares of stock.
Now on the Call side click the bid to sell the 490 Call and Ask to buy the 500 Call option. We collect $198 for selling this Call Vertical. So in total we collect $366.
Now if we click on the Curve mode while still on the trade page we can visually see the profit zone in Green.
As long as we stay above the $425 strike price and below the $490 Call we keep the full $363 that is placed in our account as soon as we hit review and send to place the trade.
Now if for some reason the stock price moves outside our range, then we can close and take the loss.
We can also close a recenter in the next month options and collect more premium.
If this does happen, keep an eye out for the next video as I will show exactly how to close and sell the options in the next month and collect additional premium while waiting for the stock to come back.
Last thing guys……..wait to place this trade just before the close on Thursday Dec 7th. That way you will be able to make sure that you are in the best position with your strikes and LULU announces their earnings right after the close on that day.
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Alright guys, if you are a beginner and this sounded confusing do not worry. It did for me as well originally. We will be continuing to cover the details in future videos. We will continue to learn and succeed together.
I’ve put a link down below for the FREE Options Workshop. Be sure to grab that.
Remember to hit like and subscribe and leave a comment below with any questions and I’ll be sure to respond. Let me know what you are trading today and having success with.
Thanks for watching please share this video with a friend and see you in the next one!