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Resurrection Trade in LULU

Home › Forums › Swing Trades › Resurrection Trade in LULU

  • This topic has 3 replies, 1 voice, and was last updated 7 years, 6 months ago by Steven Place.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • November 5, 2014 at 2:34 pm #2358
    Steven Place
    Keymaster

    Oil is below 80/barrel.

    What are you going to do with all that cash you’ve saved?

    BUY YOGA PANTS!

    LULU is in a multimonth base and has been dead money for quite some time. There’s a hint of relative strength considering it didn’t fall apart in October with the rest of the market.

    lulu

    All the major moving averages aside from the 200 day are congregating right around price, and price has been in a fairly tight range for two weeks.

    Nearly 25% of the shares float are short (that may be less as Einhorn just closed his short), and I have a feeling there can be a squeeze above 42.50.

    I am ANTICIPATING the breakout here, which gives me lower odds of success but higher reward if it works.

    Buy to Open LULU Dec 40 calls @3.50 or lower.

    Stop 39.84

    Take half off at 42.

    November 6, 2014 at 2:18 pm #2361
    Steven Place
    Keymaster

    LULU currently trading at 42.78

    Sell half LLU Dec 40 calls at 4.30

    November 12, 2014 at 1:49 pm #2360
    Steven Place
    Keymaster

    Great move, the stock is now trading above 45. This is a big level of resistance from the earnings day high so I will take some more risk off the table.

    This is a “spreading” technique where we convert the long call into a long call spread.

    Sell to open LULU Dec 47.50 call for 2.00

    December 10, 2014 at 2:47 pm #2359
    Steven Place
    Keymaster

    LULU reports earnings tomorrow in the morning so if you’re stillin the stock and want to preserve your profits, either bail now or continue to reduce your position size.

    Sell to close LULU 40 call @ 7.60

    Buy to close LULU 47.50 call @ 2.17

    All in all it’s about a 61% return on max risk, so a pretty good trade all in all.

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