Sarah Wasserman (swasserman@sir-inc.com) Lululemon Athletica inc. (LULU) has had a surge in put volume today, with roughly 12,000 puts crossing the tape by midday -- eight times the athletic apparel issue's expected single-session put volume. However, upon further review, it seems that today's heavy put volume isn't quite as bearish as it would initially appear.
Early this morning, 645 November 41 puts, marked "spread," changed hands at the bid price, while 645 November 40 puts, also designated "spread," crossed the tape at the ask price. By constructing this short put spread, the option strategist is essentially counting on LULU to remain above the $41 level until these November-dated options expire in five weeks.
For the record, peak put open interest for the November series can be found at the 42 strike, while the 50 strike carries peak call open interest.
Like the rest of the broad market, LULU enjoyed a nice rally in September, with the stock's ascent underlined by support from its 10-day and 20-day moving averages. However, LULU recently ran into resistance at $48, and has since retreated to the $45 level.
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