Lululemon Athletica Inc (NASDAQ:LULU) stock is surging this morning, last seen up 7% at $222.47, after news broke that Elliott Investment Management has taken a $1 billion stake in the athletic clothing brand. This comes alongside rumors the investment group is pushing for Ralph Lauren executive Jane Nielsen to become CEO.
Today's jump comes just days after the company posted a third-quarter earnings beat and said current CEO Calvin McDonald will step down after seven years. LULU is now eyeing a fifth-straight daily win, chipping away at its steep 42% deficit for 2025.
There is plenty of room for upgrades, with 27 of 30 covering brokerages sporting a "hold" or worse rating. Plus, short interest has risen 9% during the most recent reporting period, now accounting for 7% of the stock's total available float.
Options are red hot in response to the investment news. So far, 25,000 calls have been exchanged, triple the average daily amount. Most popular is the December 230 call, which is set to expire at the close tomorrow.
Stocks also look like an affordable way to go. This is per the stock's Schaeffer's Volatility Index (SVI) of 41%, which sits higher than just 15% of readings from the last year.
Plus, Lululemon Athletica stock's Schaeffer's Volatility Scorecard (SVS) comes in at 97 out of 100. This means the security has consistently realized higher volatility than its options have priced in.
