Athleisure manufacturer Lululemon reports quarterly earnings next Thursday, and the options market is implying a relatively tame move on earnings after a mammoth run in recent months.
Shares of Lululemon, up 118 percent in one year and 35 percent in 2018, is among a number of specialty retailers on a tear this year. Shares of Ralph Lauren, Tiffany and Urban Outfitters have gained a respective 30 percent, 21 percent and 20 percent n 2018.
Stacey Gilbert, head of derivative strategy at Susquehanna, told CNBC’s “Trading Nation” Lululemon is expecting a relatively small move on earnings this quarter. Gilbert explains.
• Options are pricing in a move of around 8 percent in either direction around earnings, a touch below what the stock has realized over the past eight quarters, though in line with what it’s done over the past four quarters.
• Given the 35 percent rise this year, Susquehanna prefers buying call options rather than the stock outright.
• Susquehanna carries a positive rating on Lululemon shares, and the firm sees the momentum continuing.
Disclosure: Susquehanna is a market maker in Lululemon.
Bottom line: Shares of Lululemon are expected to see a move of around 8 percent following its earnings report next week, according to Gilbert.
A specialty retailer up 118% in one year could have more room to run after earnings