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LULU Bull Call Spread

Lululemon Athletica (LULU) is on the verge of a technical breakout higher that could push above December highs. Look for momentum to pick up on a close above $74 as the chartists pick up on the ascending triangle breakout.

With implied volatility sitting at six-month low, getting long Delta and Vega is the optimal strategy here. The stock will need to tack on about 10 percent to get above the $80 area, which seems to be the optimal setup here.

We can purchase the March 75 calls to catch the move while selling the March 80 calls to lower our cost basis.  LULU is popping here this morning so look for a pullback to enter as momentum should keep pace in the coming weeks.

Trade Idea:


BUY +2 VERTICAL LULU 100 MAR 11 75/80 CALL @1.65 LMT

Trade Details:

Type: Bull Call Spread
Expiration Month: March
Breakeven Level(s): $76.65
Maximum Gains:
$670
Profit Taking Level: $670
Maximum Loss(es): -$330
Stop Loss:-$330

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