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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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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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