Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) is a retailer that offers consumers salon products and services in retail stores. The company’s stock is currently trading around $124.30 in a 52 week range of $80.35-$129.47. The stock has been very strong this year with shares rallying nearly 29% year to date. The company is set to report earnings after the bell today with analysts expecting EPS of around $0.83 on $711 million in revenue.
ULTA has been strong on earnings day over the past 8 quarters with shares rallying 6 times on earnings day. On average the stock moves around 14.3% on earnings day and this time around the options market is implying a move of around $13.35, or around 10.7%, by December expiration. ULTA is also looking strong on a chart with shares trading well above the Ichimoku Cloud. The stock also caught a round of upgrades earlier this week ahead of their earnings tonight. With a strong technical setup and strong historical track record I can’t justify anything but a long in ULTA. Using the options market to calculate an upside target I will be looking to get long ULTA with an upside target of $137.65
Trade: Buying the ULTA Dec 130-135 Call Spreads for $1.50
Risk: $150 per 1 lot
Reward: $350 per 1 lot