Kaminsky's Call: Remain Bearish on This Retail Stock

In early July, I wrote that one of the hardest things an investor can do is separate a good product from a good stock. I used Lululemon Athletica as my case study. And I was wrong.

While I maintained that I loved their clothes, I considered the company a "cult stock." I didn't believe that its sky-high earnings multiples could be sustained.

I was bearish in July, and I remain so today. Looking at the stock chart, I see a company that has come too far, too fast for too long. If I were still in the business of buying and selling stocks, this would be one that I would short. And that is what I recommended, and I still feel the same way.

But what I should have suggested, and this reinforces what I learned in my JRO days, was to buy puts instead of shorting the stock. Using options to express my bearish views not only would have given me a leveraged bet to the downside, but it would also have defined my risk.

Christmas will be the ultimate testfor this stock. People tend not to overpay for athletic wear when times are tough.

But if I'm wrong, I won't be wrong being short the stock, a trade that would expose me to unlimited losses.

I'll choose the better option and buy puts.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

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