Earn 11% Today or Buy LULU 30% Cheaper – It’s a Win-Win

At about $201.87 a share, Lululemon Athletica (LULU) is trading about 52% below its 52W high.

Do you think LULU stock is a good long-term bet at current levels? What about at a 30% discount at about $140 per share? If you think that is a steal, and have some cash ready to go, here is a trade.

11% annualized yield at 30% margin of safety, by selling Put Options.

• Sell a long-dated Put option expiring 1/15/2027, with a strike price of $140
• Collect roughly $995 in premium per contract (each contract represents 100 shares)
• That’s about 7.1% annualized yield on the $14,000 you’re setting aside for the possibility of buying the stock
• This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 11.1%
• And you give yourself a chance to buy LULU stock at deep discounted price of $140

However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.

Possible Trade Outcomes: You Win Either Way

But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.

First, you want fundamentals to check out. For details, see Buy or Sell LULU Stock or check Lululemon Athletica Investment Highlights

Second, you want to better understand competitive advantage and industry tailwinds. Below is what specifically gives us the conviction.

Why Hold LULU Stock Long-Term

Lululemon is a category-defining brand with a powerful, hard-to-replicate community-based moat that creates high customer retention. It operates in the global ‘athleisure’ market, which benefits from a strong secular tailwind driven by the shift towards health, wellness, and versatile apparel. Despite recent slowing in the Americas and rising competition, its strong brand equity and significant international growth opportunities in markets like China make it a desirable long-term holding if assigned.

Competitive Advantage

We classify LULU’s economic moat as WIDE, with the primary source being Switching Costs

• Cultivated high customer loyalty with retention rates of 76% overall and 92% among top 20% spenders, driven by ‘social switching costs’ from its community-based model of in-store classes and brand ambassadors.
• Successfully implemented modest, targeted price increases on high-demand core products, demonstrating pricing power with its loyal customer base despite facing some broader consumer pushback.
• Brand has significant ‘mindshare,’ with budget retailers attempting to copy iconic products like ‘Align’ leggings, cementing its status as the default standard in premium athleisure.

See Lululemon Athletica Full Analysis.

Industry Tailwind

The industry tailwind is STRONG, with CAGR projection of 9.3% (Source: Grand View Research)

Secular Trend: Shift to Health & Wellness Lifestyles
Key Risks: Intensifying competition from DTC brands (e.g., Vuori, Alo) and margin pressure from U.S. tariffs on imported goods.

Financial Guardrails

Cash Generation: Positive Free Cash Flow
Balance Sheet: Strong balance sheet with significant cash and cash equivalents and no traditional interest-bearing debt reported in the March 2025 annual report, indicating very low bankruptcy risk.

Not comfortable with options or stock-specific trades? PORTFOLIOS are even better.

A Multi Asset Portfolio Gives You Safer Smarter Growth

Stocks can jump or crash but different assets move on different cycles. A multi asset portfolio helps you stay invested while cushioning swings in equities.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices