Buy LULU puts with time, or Sell call credit spread.
Remember this is a weekly chart. Price retreated from 400 and I am not sure if stock price will remain so high after earnings, or going into mid-year.
Stock price can move substantially lower which will make a great swing trade. Options volume is low on this stock, and so is general stock volume. If you are not willing to hold for a few weeks for price to change meaningfully, then you may want to skip this trade idea.
Stock price can move substantially lower which will make a great swing trade. Options volume is low on this stock, and so is general stock volume. If you are not willing to hold for a few weeks for price to change meaningfully, then you may want to skip this trade idea.
Comment:
Stock under 405 remains bearish. Notice that options farther out in time are less affected by intraday price moves because they have lower gamma.
Comment:
Sorry correction - I was on mobile before and missed it. Daily chart shows 406 as high on 28 Dec'21. I am holding puts for now and will see what happens this week.
Comment:
. ER not until end of June. P/E is 54. I still think stock goes below 400 but maybe not so soon. So what choices do I have to manage this trade?
1. Sell puts, take loss, move on
2. Trim position, sell some keep some
3. With #1 or #2, day trade or swing calls
4. Hold puts even though price is over 406
5. Buy more puts
I will never choose #5 because if I am wrong I lose more and I do not want more capital in this trade. Choices 1&2 are best if I have less time to expiry, do not like technical conditions, or used too much capital. I would consider option 3 but not this time with price at resistance and low volume. I am going to choose #4 because I have time to hold puts and technically, chart shows me price should move lower soon.
1. Sell puts, take loss, move on
2. Trim position, sell some keep some
3. With #1 or #2, day trade or swing calls
4. Hold puts even though price is over 406
5. Buy more puts
I will never choose #5 because if I am wrong I lose more and I do not want more capital in this trade. Choices 1&2 are best if I have less time to expiry, do not like technical conditions, or used too much capital. I would consider option 3 but not this time with price at resistance and low volume. I am going to choose #4 because I have time to hold puts and technically, chart shows me price should move lower soon.
Comment:
Trade closed manually:
LULU is 373 premarket. I will sell the remaining puts today. They captured about a 30pt change in stock price.