Exploring Options Trading with lululemon athletica Inc. (LULU)

Investors looking at lululemon athletica inc. (ticker: LULU) have some new options available for the expiration date of September 26. This article delves into the available contracts, including a notable put and call option that could interest potential investors.

Analyzing the Put Option

One intriguing option on the LULU options chain is the put contract at the $150.00 strike price, which currently has a bid of $1.00. Selling this put contract means an investor is agreeing to buy LULU shares at $150.00. By selling the put, the investor collects the premium, effectively lowering their cost basis to $149.00 per share (before any broker fees). For anyone already considering buying LULU shares at a market price of approximately $192.77, this could be an appealing alternative.

This $150.00 strike price is around 22% lower than the current trading price, which means that the put option is out-of-the-money by this percentage. Current data suggests that there is an 87% probability that this put option may expire worthless. Investors can keep track of these odds over time, as changes in the likelihood of expiration can affect the overall strategy.

If the put contract does expire without any value, the premium collected would still be a return of 0.67% based on the cash commitment, which annualizes to about 4.87%. This returns strategy is often termed a "YieldBoost."

Evaluating the Call Option

Next up, the call option for LULU is available at a $200.00 strike price with a current bid of $10.30. If an investor buys LULU shares at the current market price of $192.77 and subsequently sells this call contract as a "covered call," they are securing a commitment to sell their shares at the $200.00 strike price. Including the premium received, this could yield a potential total return of 9.09% if the stock is called away by the expiration date.

While this call option provides immediate returns, it’s also essential to consider the potential upside—if LULU stock experiences a significant price increase, investors could miss out on those gains. Therefore, a careful examination of LULU’s recent trading history and overall business fundamentals becomes crucial for making informed decisions.

At the $200.00 strike, which represents about a 4% premium over the current stock price, there’s a chance that this covered call might also expire worthless. In this scenario, the investor would retain both their shares and the premium collected from selling the call. Current analytical insights indicate a 51% probability of that happening, and these statistics will be monitored over time to see if they evolve.

Should the covered call expire worthless, the premium gained will provide a 5.34% additional return to the investor, translating to an impressive 39.01% on an annualized basis, another aspect referred to as "YieldBoost."

Volatility Insights

In the realm of options trading, understanding implied volatility can offer further insights. The put contract presented a high implied volatility of 69%, while the call option showcases a slightly lower volatility of 56%. When considering the actual market, the trailing twelve-month volatility—accounting for the preceding 250 trading days alongside the current price of $192.77—stands at around 48%.

Investors interested in exploring various put and call options contracts can find additional ideas and analysis at resources focused on stock options.

In summary, lululemon athletica Inc. presents several intriguing opportunities through its options trading chain. Whether considering puts or calls, there are various strategies that investors can adopt based on their market outlook, risk tolerance, and investment goals.