After yesterday’s blowout quarterly earnings report, it’s safe to say that Lululemon Athletica Inc. (NASDAQ:LULU) has finally turned things around. Roughly a year ago I was panning LULU stock amid the company’s struggling attempts to revitalize its business. Now, the shares look primed to reclaim their former glory.

While not all of the retail sector is seeing a boom amid the growing U.S. economy, select quality retailers like Lululemon are benefiting greatly. In its quarterly report, the company said it earned  $1.33 per share on revenue of $929 million.

Analysts were expecting earnings of $1.27 per share on revenue of $912.41 million.

What’s more, Lululemon placed full-year guidance at between $3 and $3.08 per share, on revenue of $2.985 billion to $3.022 billion. The range was to the high side of the current consensus target for earnings of $3.03 per share on revenue of $2.95 billion.

The analyst community cheered the results. Credit Suisse, Instinet and Susquehanna all lifted their price targets on Lululemon stock. That said, the average price target for LULU stock stands at $84.33, just below the stock’s current perch near $86.

As the brokerage bunch digests Lululemon’s quarterly results, we could see more price target hikes to bring expectations more in line.

As for ratings, brokerage’s are still lagging on LULU stock. According to Thomson/First Call, only 18 of the 35 analysts following the shares rate them a “buy” or better. This leaves room for potential upgrades down the road.

Click to Enlarge Technically speaking, LULU stock is in the midst of a breakout from a long consolidation period. The shares had been locked in a trading range between $78 and $82 since late December.

This range largely sheltered LULU from the recent gyrations in the broad market, indicating strong price support for the shares. Now that LULU stock has broken out of this range, more upside should be in the cards.

Turning to the LULU options pits, we find a wealth of bullish sentiment. Currently, the April put/call open interest ratio arrives at 0.48, with calls more than doubling puts among near-term options. Clearly, options traders are betting on follow through buying after yesterday’s earnings win.

Overall, April implieds are pricing in a potential move of about 7% for LULU stock heading into expiration. This places the upper bound near $92, while the lower bound rests at $80.

2 Trades for LULU Stock

Call Spread:  Traders looking to bet on a continued rally following LULU stock’s breakout might want to consider an April $86.50/$87.50 bull call spread. At last check, this spread was offered at 36 cents, or $36 per pair of contracts. Breakeven lies at $86.86, while a maximum profit of 64 cents, or $64 per pair of contracts, is possible if LULU stock closes at or above $87.50 when April options expire.

Put Sell: For those traders bullish on Lululemon but concerned about a lack of follow through buying, a LULU put sell may be just the neutral path you are looking for. At last check, the April $80 put was bid at 77 cents, or $77 per pair of contracts.

As long as Lululemon stock trades above $80 through expiration, traders pursuing this strategy will keep the $77 premium. However, if LULU trades below $80 ahead of expiration, you could be assigned 100 shares for each contract sold at a price of $80 per share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.