LULU Reaches New All-Time Highs

August 31st, 2020 LULU Reaches New All-Time Highs Dear Reader, On Friday, we looked at a Daily Price Chart of the SPDR S&P Homebuilders ETF noting the ETF's 50-Day EMA is trading above the 100-Day EMA. For today's Trade of the Day we will be looking at a Daily Price chart for Lululemon Athletica Inc., stock symbol: LULU. Before breaking down LULU's daily price chart let's first review which products and services are offered by the company. Lululemon Athletica Inc., together with its subsidiaries, designs, distributes, and retails athletic apparel and accessories for women, men, and female youth. It operates through two segments, Company-Operated Stores and Direct to Consumer. The company offers pants, shorts, tops, and jackets for healthy lifestyle and athletic activities, such as yoga, running, and training, as well as other sweaty pursuits; and athletic wear for female youth. It also provides fitness-related accessories. Now, let's begin to break down the Daily Price chart for LULU. Below is a Daily Price Chart with the price line displayed by an OHLC bar. The Daily Price chart above shows that LULU stock has been hitting new 52-Week Highs regularly since late-July. Simply put, a stock does not just continually hit a series of new 52-Week Highs unless it is in a very strong bullish trend. The Hughes Optioneering team looks for stocks that are making a series of 52-Week Highs as this is a good indicator that the stock is in a powerful uptrend. You see, after a stock makes a series of two or more 52-Week Highs, the stock typically continues its price uptrend and is a good candidate for a call option debit spread. Our initial price target for LULU is 405.80 per share. Profit if LULU is Up, Down or Flat Now, since LULU is making a series of 52-Week Highs and the stock's bullish trend will likely rally from here, let's use the Hughes Optioneering calculator to look at the potential returns for a LULU call option spread. The Call Option Spread Calculator will calculate the profit/loss potential for a call option spread based on the price change of the underlying stock/ETF at option expiration in this example from a 10.0% increase to a 10.0% decrease in LULU at option expiration. The goal of this example is to demonstrate the 'built in' profit potential for option spreads and the ability of spreads to profit if the underlying stock is up, down or flat at option expiration. Out of fairness to our paid option service subscribers we don't list the option strike prices used in the profit/loss calculation. The prices and returns represented below were calculated based on the current stock and option pricing for LULU on 8/28/2020 before commissions. Small Accounts Can Lead to BIG Gains Market guru and 10-time Trading Champion Chuck Hughes started out with a small $4,600 trading account but in his first two years trading, Chuck made over $460,000 in profits! Now, he's willing to share his simple and successful method. Click here to learn more. Built in Profit Potential For this option spread, the calculator analysis below reveals the cost of the spread is $542 (circled). The maximum risk for an option spread is the cost of the spread. The analysis reveals that if LULU is flat or up at all at expiration the spread will realize an 84.5% return (circled). And if LULU decreases 10.0% at option expiration, the option spread would make a 79.6% return (circled). Due to option pricing characteristics, this option spread has a 'built in' 84.5% profit potential when the trade was initiated. Option spread trades can result in a higher percentage of winning trades compared to a directional option trade if you can profit when the underlying stock/ETF is up, down or flat. A higher percentage of winning trades can give you the discipline needed to become a successful trader. The Hughes Optioneering Team is here to help you identify winning trades just like this one. Interested in accessing the Optioneering Calculators? Join one of Chuck's Trading Services for unlimited access! The Optioneering Team has option calculators for six different option strategies that allow you to calculate the profit potential for an option trade before you take the trade. Trade High Priced Stocks for $350 With Less Risk One of the big advantages to trading option spreads is that spreads allow you to trade high price stocks like Amazon, Google, Netflix or Apple for as little as $350. With an option spread you can control 100 shares of Apple for $350. If you were to purchase 100 shares of Apple at current prices it would cost about $50,000. With the stock purchase you are risking $50,000 but with an Apple option spread that costs $350 your maximum risk is $350 so your dollar risk is lower with option spreads compared to stock purchases. Chuck's Elite Inner Circle Today Chuck is offering you a very special deal. As a Trade of the Day subscriber, if you sign up and become a member of The Chuck Hughes Inner Circle Trading Service today, he will give you special discount. Just call Brad at 1-866-661-5664 or 1-310-647-5664 to join and use the code "Optioneering VIP" to receive special pricing! Wishing You the Best in Investing Success, Chuck Hughes Editor, Trade of The Day Have any questions? Email us at dailytrade@chuckstod.com ​Join Chuck's Weekly Optioneering Newsletter! Unsubscribe Investment Software Inc 22C New Leicester Hwy #117 © 2020 Tradewins Publishing. All rights reserved. The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the "Services") is not customized or personalized to any particular risk profile or tolerance. 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