33L trade ideas
LULU this weekIdea "borrowed" from here:
www.reddit.com
"LULU will be participating in the 19th annual ICR conference this week between 1/9 – 1/11 where the company is scheduled to present on day 2 (1/10).
"On Wednesday there was a buyer of the January 13th 70 calls 3,994 times for $2.39. Then on Friday there was a buyer of the January 13th 70/75 vertical call spread 2,000 times for $1.35. Next week’s options have bids up to $80 on the call side and all the way down to $50 on the put side with the at the money straddle pricing in about a 7% move either way.
"During last year’s ICR conference LULU raised their EPS and revenue guidance for the following quarter in pre market ahead of their presentation. This sent the stock higher by as much as 12% that day."
IV on the Jan13's are around 74%.
Looking at a 60/64/72/75 IC @ 1.07
Fundamental improvement drives stock re-ratingThis thread/idea takes over from the previous one, where we initiated a long position at 55.
We assume a long position at $60/share to take into account the call conversions (please see related idea below).
FUNDAMENTALS ON THE UP AND UP
LULU surprised positively on both top and bottom lines
Most notable improvement = Gross margin expansion by 4.2%
Fundamental improvement --> Long-awaited re-rating in the stock
Broker upgrades are still feeding through post earnings release
TECHNICAL IMPROVEMENT
Long-term turning positive
Medium-term positive
Short-term positive, overbought
Expect some (time) consolidation in the visible term
We look for a close above $70 for further sign of strength
Next hurdle: To close the gap formed between 71.65 and 75.12
NEXT TARGET = $80/SHARE
Existing holders are already in the money and should stay long
New investors could go long here (1/2 position) and buy more (1/2 position) on a pull back towards $66
RISK/REWARD STILL COMPELLING
TARGET = $80/SHARE
STOP-LOSS = $66/SHARE
REWARD/RISK = 2.5X (assuming new position initiated at $70)
OPTION TIP: IRON FLY INTRATRADE DEFENSEPosted here is a live trade example of a LULU iron fly. I started this out as an earnings trade iron condor, looking for classic volatility contraction post-announcement. I got the contraction I wanted, but not the movement, as price immediately broke the short call side of my setup, after which I rolled to an iron fly. (See Post Below). A week after earnings, price has dipped, skewing the net delta of the setup long.* Currently, the net delta of the setup is 24.92, with the respective strikes having the following delta/dollar values:
57.5 Long Put -11.05 delta/46.50
70 Short Put 65.10 delta/522.50
70 Short Call -34.92/170.00
80 Long Call 16.14/19.50
What, if anything, should I do to "defend" the short put side of the setup? Here are my options, with pros and cons for each:
1. Do nothing. There is, after all, plenty of time** until expiry and "fiddling" with the setup here may unnecessarily complicate exiting the trade and potentially increase risk if I choose, for example, to erect a defensive hedge or roll the short call side down toward current price. Additionally, the setup isn't "hugely" out of skew yet and price remains above my break even for the short put side of the setup.
2. Roll the short call or short call side toward current price in the same expiry. This would add short delta to the setup. Personally, the only time I want to take a straddle and roll into an "inverted strangle" is when the short option is approaching worthless and basically providing little to no protection to the oppositional side. That isn't the case here yet: the short call is at the 35 delta or so and is still worth $170.00.
3. Erect a defensive hedge. In this particular case, the setup is net delta long, so I would look to add short delta to the setup, either with a naked short call or a short call vertical. Generally speaking, I like to erect hedges that are, in themselves, high probability setups, so in all likelihood I would sell the 20 delta short call or as close as I can get to it or erect a short call vert with the short leg at the 20 delta strike, and the long leg above it. The Jan 20th 72.5 short call is worth 24 short delta, so that would just about do the trick to get the setup back to almost completely delta neutral. Alternatively, the 72.5/77.5 would add in -14 delta and bring in .70 in credit to boot.
Unfortunately, this adds risk to the setup, namely that price will retrace to the call side, thus amplifying short delta, because I would now basically have two short delta or bearish spreads on (the 72.5/77.5 and the 70/80).
* * *
My basic approach is to stay mechanical. If the untested side isn't approaching worthless, simply leave the setup alone, as temporarily painful as that may be. One side or the other of an iron fly, after all, is being constantly tested, as there is practically no way that price will stay at your short straddle for any length of time.
Only when the untested side is approaching worthless do I look at what can be done, with my first preference being to roll the untested side toward current price. This results in a "goofy" setup (an inverted short strangle), but it also means that I'm not taking on additional risk as I would with a hedge.
If rolling the untested side would simply be unproductive (there is too little time to expiry to get anything for the roll, for example), I then look at a purely defensive hedge either in the setup's current expiry (again, if that is productive credit-wise) or, if necessary, further out in time.
* -- As price moves toward the put side of the setup, delta "lengthens" or becomes more net positive; as it moves to the call side, it "shortens" or becomes more net negative.
** -- "Plenty of time" is somewhat subjective here and will depend on what's happening with the setup.
OPENING: LULU DEC 16TH 49/52/64/67 IRON CONDOR... for a .92 credit. Truth be told, I chased a bit. It announces earnings tomorrow after market close, but just wanted to get into play, since there isn't much premium out there to be sold, and I won't have time to putz with it tomorrow.
Here are the mid price metrics:
Probability of Profit: 61%
Max Profit: $94
Max Loss/Buying Power Effect: $206
Break Evens: 51.06/64.94
I'll look to manage this at 50% max profit on the post-earnings volatility contraction.
Bad news already in the price: Buy on broker downgrade.Current consolidation range 54-59.
We are at the bottom of this range.
This bottom also corresponds to the long term support line, visible on weekly chart below.
Stock downgraded this morning by Credit Suisse but fails to break the support.
Believe most bad news is in the price.
Short interest on the stock is significant: 23% of float - Makes short squeeze probable on any marginally good news.
Consensus is a BUY with target price at 69.
Looking at a break above the 59 resistance.
Target 66
Stop loss 54
RR 5x
Double bottom on LULULULU has been showing the bullish support I've been waiting for for over a month. We double bottomed and are breaking the neckline now.
To buy now or to wait for it to drop to around $51-52?Very strong trendline..I am going to keep watching $LULU
LULU holding pivot at 55, but for how long?Technically Speaking
LULU is holding the pivot area of 55ish, so far, the week is not out yet.
A pretty clear range looks to be forming b/w 55-80 level, assuming the 55 level holds.
Fundamentals
Here is a summary of the company.
What to do?
Bit of a tough one for me. The R/R seems to favor the long side, but I think the bigger level and tougher one to break will be the 36-40 area. Depending on your time frame and style you could scale in and stop out completely under 30-35.
$LULU Could catch more UpsideLULU has been grinding up intra day then breaking out, this is the third consolidation so i'm looking for a third run here. If not, then my risk is set under the cosoldidations. I'm holding this one a little longer
LULU down towards strong support. Looking for a BUY.Near strong support.
Waiting for bullish candle and a retest with great volume to buy.
LULUNot sure which way this is GOING to go, but I think it COULD potentially go either way. Been in a pretty well defined channel for some time now. I think when we break the channel, volume will come in and we will trend in a direction.
Earnings dip provides long opportunity. Reward/Risk ratio = 2.7xFUNDAMENTALLY: COMPELLING GROWTH AND EARNINGS PROFILE
LULU is a specialized sportswear company with superior growth (revenue CAGR +24%) and profitability (ROE >20%). The stock was recently hammered on earnings which were in line, probably due to a rich valuation. This provides an entry opportunity into the stock.
TECHNICALLY: STILL SOLID AFTER THE DIP, AND OVERSOLD
- Currently trading in the middle of the range ($65.98) of its long-term uptrend channel ($48 - $82).
- Staged a powerful breakout in late March 2016.
- Previous resistance (descending dotted line) has turned support.
- Got hammered after flat earnings and esp. after hitting previous historical high.
- Remains above main supports (see graph).
- Currently looking oversold (RSI<30) and building a base above 200d MA.
- Next levels to watch on the downside are $65.25 (200-MA) and $60.00 (breakout support).
TRADING CONCLUSION
- Go long at the current price with upside targets at $71.50 and $82.00 and stop-loss at $60.
- Compelling Reward/Risk ratio of 2.7/1.
- Expect trade duration of 13 weeks, in line with recent up-channel duration.
$LULU Falling$LULU has been one of the hottest stocks this year....until today. Their mixed guidance for next year is nothing to worry about. If you don't live in a cave you know every girl either wants or wears lulu. I know there are cheaper options, but lets be honest...they are a status symbol. As long as the stock holds $67, i think you pick some up.
www.trendyprofits.com
LULU- taking Put option on earningLULU seems scooping after a huge run & also breaking down from a rising wedge. Money-flow is strongly down in the neg-side. We think its run is over, and it will fall from here with the earning report.
On the trading side we like to take option on earnings here, we are looking for SepW1 75 put $2.07, and Oct 75 put for $3.46
You can check our updated analysis on GALE in the trading room/ Executive summery link here-
www.screencast.com
Time Span: 22:50"
Trade Status: Pending
2 H&S in a rowThere is a new H&S confirmed by a backtest in the daily and an older H&S not yet fulfilled which has been building since end of past year. Both of tem indicate higher proces. And so does the new high afer a double top.
