Lululemon (LULU) will report earnings 3-27 after the close with the Street consensus for Q4 at $5.87 EPS and $3.585B in Revenues (+11.85%) while Q1/FY26 seen at $2.74/$2.4B and $15.40/$11.34B implying 7.25% topline growth and 7.15% EPS growth for FY26. LULU shares have closed higher on earnings seven of the last eight reports with a six-quarter average max move of 10.8% and Q4 reports have historically been the most volatile. LULU is a designer, distributor, and retailer of technical athletic apparel, footwear, and accessories. LULU offers a comprehensive line of performance apparel, footwear, and accessories such as pants, shorts, tops, and jackets designed for a healthy lifestyle including athletic activities such as yoga, running, training, and most other activities. Women accounted for 63% of revenues in 2023 but LULU sees an opportunity for Men to continue growing. Americas represent 79% of revenues. LULU has a $40.95B market cap and trades 21X Earnings, 12.8X EBITDA, 4X Sales and 25.7X FCF putting valuation near the low-end of its 10-year range. Analysts have an average target of $400 and short interest at 5.6% of the float has jumped from 4% to start March. MSCO out with a note last week seeing upside to Q4 estimates but expects conservative management outlook. Citi cut its target to $330 last week expecting a slight Q4 bear but the focus on the 2025 outlook. Truist recently noted a surge in LULU TikTok trends. OpCo raised its target to $500 from $380 on 2/7 saying over the next several quarters, on the heels of continued superb operational and financial disciplines, and strengthening merchandising, Oppenheimer is increasingly optimistic that top-and bottom-line expansion at Lululemon should gradually solidify, pushing back towards normalized-algos. LULU has recently retraced its December surge and hammered on the 200-MA last week and a major volume zone of support, but below $306.50 leaves a pocket for a move back to $270 or lower. Conversely, above $330 puts $341.50, $355 and $370 in play as upside resistance levels. LULU options are pricing in a 7.2% earnings move and 30-day IV Skew at +3.8 is very steep and compares to the 52-week average of +0.5.  LULU put/call open interest is at the 56^th percentile and average IV30 crush is sizable at -40.8%. LULU March 28^th (W) $300 puts with notable sales near 1000X to open on Friday and LULU has 2000 each Dec. 2026 $350 and $300 short puts in OI, a buyer of 1500 April $340 calls on 3/20 but also 1500e ach April $320 and January $290 puts bought. A trade on 3/4 sold 1000 June $330 puts to open.

Trade to Consider: Long the LULU April/June $370 Calendar Call Spreads at $9.25 Debits