Lululemon Athletica (LULU), a favorite among the momentum crowd, is beckoning to profit seekers.
Since lunging higher following its latest earnings announcement earlier in the month, Lululemon stock has been consolidating in bullish fashion. Tuesday’s pop ushered LULU right to the doorstep of major overhead resistance at $69.
This pesky ceiling has stymied previous rally attempts in LULU stock all year long. But if the recent accumulation days are any indication, the bulls are bringing out the big guns for the next breakout attempt.
![lulu stock chart](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
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Provided the buying pressure remains firm, I suspect the LULU stock price vaults higher once all the overhead supply is absorbed. Would-be LULU buyers have one of two choices: Pile into the stock now in anticipation of the surge with hopes that the breakout bid proves successful, or wait for LULU to poke its head above the $69 zone to confirm the breakout is the real deal before pulling the trigger.
Either way, LULU bull call spreads are worth a look.
The Aug $70/$75 call spread offers an attractive return for aggressive traders looking for LULU to really soar following the breakout. It can be purchased for about $1.25.
The max risk is limited to the initial $1.25 debit and will be lost if LULU stock sits below $70 at Aug expiration. The max reward is limited to the distance between strikes minus the net debit, or $3.75, and will be captured if LULU stock price can rally above $75 by expiration.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.