Speaking on Bloomberg Markets, Jim Strugger, a derivatives strategist at MKM Holdings, suggested to the viewers a stock replacement strategy in Lululemon Athletica inc. LULU ahead of earnings.
The company is going to report earnings on September 1 and Strugger believes it's going to be a solid report. He added that Lululemon gained 50 percent year-to-date and he thinks it could be a little bit ahead of itself.
To lower the risk ahead of earnings, Strugger thinks it would be a good idea to sell the stock and buy the December 82.50/90 call spread for $2.40. The trade breaks even at $84.90 and if the stock trades to $90 or higher, its maximal profit would be $5.10. His maximal loss on the trade is $2.40.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.