$LULU daily pick: sell Jan 15 $90 put (buy-side) at the October low as the new CEO rebuilds

$LULU: I'm selling the Jan 15 $90 put on @lululemon after today's 4% drop.

At midday ($106.25):
18% under the 200-day and 53% off the December high
About 11x the 2026 EPS guide
$2.56 credit, breakeven $87.44
About 2.8% in 65 days (~16% annualized)

I think most of the bad news is in the price because the stock trades at about 11x earnings while the new CEO is still building her team. The $90 strike sits right at the October low.

I would rather get paid to wait at $90 than chase a turnaround that has not shown up in the numbers yet.

Not financial advice

---

What happened: On Sep 3 Lululemon reported Q2 revenue down 4% to $2.4B with comparable sales down 9% and Americas comparable sales down 12%. It cut its 2026 outlook for the second time this year to revenue of $10.35B to $10.5B (down 5% to 7%) and EPS of $9.48 to $9.73. The stock hit a 52-week low of $90.38 on Oct 8 and bounced 22% into yesterday's close before today's drop.

---

Why a put and not the stock: the turnaround is early. Heidi O'Neill started as CEO in September and today Lululemon named Ben Hallam (from Four Seasons) as chief brand officer and Emily Sunderland (from BCG) as chief strategy officer. The $90 strike is 15% under the current price and I get paid $256 per contract to wait.

---

The risk: this expiry includes the next report, which Robinhood has on Dec 10. The Q3 EPS estimate is $0.97 vs $2.59 a year ago. Analysts are cautious, with Cantor starting at Neutral with a $121 target this week and Baird saying its October US demand data weakened further. If Q3 disappoints, $90 may not hold and I would own the stock at $87.44 net.

---

What I'd watch: holiday traffic in the Americas, whether markdowns stay under control (Baird's October checks had markdown assortment growth at 5%) and what the new team does with product and marketing. I am not expecting a quick fix, which is why I want the lower entry.

Sources: Lululemon Q2 FY2026 release: revenue -4% to $2.4B, comps -9%, Americas comps -12%, 2026 revenue $10.35-10.5B (-5% to -7% · CNBC: 2026 guide cut to revenue $10.35-10.5B and EPS $9.48-9.73 · Reuters: Lululemon cuts outlook again, 2026 revenue seen down 5%-7%, North America -8% · Yahoo/MediaPost: new chief brand officer Ben Hallam and chief strategy officer Emily Sunderland; O'Neill joined in Septe · Simply Wall St: Hallam and Sunderland appointments · Investing.com: Cantor initiates at Neutral, $121 target

Not financial advice. For informational and educational purposes only.