LULU Earnings Setup – Undervalued Deep OTM Put Play?

🧘‍♀️ LULU Earnings Setup – Undervalued Deep OTM Put Play? 💣
📅 Earnings: June 5, 2025 (AMC) | ⏳ Expiry: June 6, 2025 (1D)
🎯 Strategy: Low-premium put for “sell-the-news” drop after extended rally
🔍 Multi-Model Analyst Summary
Model Bias Strike Premium Confidence Comment
Grok/xAI Moderately Bullish 335C 14.45 65% IV high, but calls rich
Claude Moderately Bearish 330P 12.75 65% Max pain gravity
Llama Moderately Bullish 340C×2 12.15 80% Above key MAs, peers strong
Gemini Moderately Bearish 302.5P 3.15 65% Heavy put OI at $325
DeepSeek Moderately Bearish 285P 0.88 65% Unusual put volume at $285

📊 Technical & Sentiment Highlights
IV Rank: 0.68 → High risk of IV crush post-earnings

Expected Move: ±8.49% (~$28.45)

Max Pain: $325 – indicates potential pullback/pin scenario

Key Risk Factors: Governance flags, mixed sector sentiment, peer strength offsets margin concerns

Liquidity Check: $285 put OI = 2,725; volume = 2,088 → ✅ tradable

🎯 Trade Setup – Earnings Put Play
Instrument: LULU

Direction: PUT (SHORT)

Strike: $285.00

Expiry: 2025-06-06 (Friday)

Entry Price: $0.88

Profit Target: $1.00 (≈13.6% gain)

Stop Loss: $0.25 (≈71.5% of premium)

Size: 1 contract

Entry Timing: End of day 6/5 (pre_earnings_close)

Confidence Level: 70%

⚠️ Risk Management Notes
💥 Requires big move (~15.3% drop to break even)

⏳ 1-day expiry = fast theta burn – quick exit post-earnings

🎢 IV Crush: Even a small move might not offset premium decay

🧾 Audit-related risk: News drop or weak guidance could trigger panic selling

🧠 Rationale
After a strong run-up into earnings and elevated IV levels, LULU is vulnerable to a "sell-the-news" event. The $285 put is deep OTM but has strong volume and fits within the low-risk, high-reward zone. Risk is capped, and reward could exceed 100%+ with a strong bearish move.