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Quantchabot has detected a promising Bear Call Spread trade opportunity for LULULEMON ATHLETICA (LULU) for the 27-May-2022 expiration period. You can analyze the opportunity in depth over at the Quantcha Options Search Engine.
LULU was recently trading at $318.10 and has an implied volatility of 57.32% for this period. Based on an analysis of the options available for LULU expiring on 27-May-2022, there is a 34.23% likelihood that the underlying will close within the analyzed range of $276.66-$318.19 at expiration. In this scenario, the average linear return for the trade would be 19.31%.
Big -7.42% Change: After closing the last trading session at $343.60, LULULEMON ATHLETICA opened today at $336.26 and has reached a low of $309.53.
Trade approach: A movement as big as -7.42% is a significantly bearish indicator, so this trade is designed to be profitable if LULU maintains its current direction and does not revert back to pricing on the bullish side of $318.10 on 27-May-2022. If possible, the trade has been padded such that slight movement against the trade would still return a profit.
Upside potential: Using this bearish strategy, the trade would be profitable if LULULEMON ATHLETICA closes at or below $318.28 on 27-May-2022. Based on our risk-neutral analysis, there is a 50.08% likelihood of this return.
Downside risk: As with any options trade, there is a substantial downside risk where you may lose most or all of your investment.
To analyze this trade in depth, please visit the Quantcha Options Search Engine.