A specialty retailer up 118% in one year could have more room to run after earnings

Athleisure manufacturer Lululemon reports quarterly earnings next Thursday, and the options market is implying a relatively tame move on earnings after a mammoth run in recent months.

Shares of Lululemon, up 118 percent in one year and 35 percent in 2018, is among a number of specialty retailers on a tear this year. Shares of Ralph Lauren, Tiffany and Urban Outfitters have gained a respective 30 percent, 21 percent and 20 percent n 2018.

Stacey Gilbert, head of derivative strategy at Susquehanna, told CNBC's "Trading Nation" Lululemon is expecting a relatively small move on earnings this quarter. Gilbert explains.

• Options are pricing in a move of around 8 percent in either direction around earnings, a touch below what the stock has realized over the past eight quarters, though in line with what it's done over the past four quarters.

• Given the 35 percent rise this year, Susquehanna prefers buying call options rather than the stock outright.

• Susquehanna carries a positive rating on Lululemon shares, and the firm sees the momentum continuing.

Disclosure: Susquehanna is a market maker in Lululemon.

Bottom line: Shares of Lululemon are expected to see a move of around 8 percent following its earnings report next week, according to Gilbert.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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