Nike (NKE) and Lululemon (LULU) are two of the most well-known athleisure stocks. Both meaningfully outperformed the S & P 500 from year-end 2019 through the pandemic plunge to year-end 2021, and both have seen dismal performances since. Nike, which will report earnings this week, is down almost 50% from its November 5, 2021, all-time highs. Lululemon’s all-time high occurred more recently, on December 29th, 2023, the last trading day of the year. However, its performance from that recent peak to the present is essentially the same as Nike’s. Lulu has fallen more than 45% year-to-date. The consensus is that Nike’s fiscal 1Q sales will fall about 10%. Expectations are that all regions will fall mid-single to low-double-digits amid weaker global macroeconomic spending. Direct-to-consumer business is also expected to decline by mid-teens. The net income margin is expected to be nearly cut in half. The only positive the Street anticipates, other than slightly lower materials costs, is the appointment of long-time Nike employee Elliott Hill, who retired from Nike in 2020 after being passed over for CEO, to replace current CEO John Donahue in that role on October 14th. Nike has recovered from stagnating sales in the past. For example, revenues and net income at Nike flatlined from late 1997 through late 2003 but quadrupled over the next 20 years as growth resumed. Elliott Hill occupied several roles at the company during that time, so shareholders may be comforted that he has the necessary experience to get the company back on track. The success of Swiss athletic shoe company ON Holding, AG (ticker ONON, up more than 24% YTD) is evidence that focusing on what the company sells (the product) may be more important than how it sells it. Outgoing CEO Donahoe concentrated mainly on emphasizing Nike’s DTC/digital business. Hill, I believe, will look to reinvigorate their offerings. NKE YTD mountain Nike, year-to-date The tricky bit is that the promise of that strategic shift will not be reflected in the company’s trailing results when they report this week. Moreover, Nike rallied 10% on news of Hill’s appointment two weeks ago. I’m optimistic Hill will put Nike on a better trajectory, but it could take some time to play out. Therefore, I prefer longer-dated calls, financed along the way with the sales of nearer-dated higher-strike calls, to take a cautiously bullish position in Nike through earnings and a potentially choppy election season. I provide an example of an October/March diagonal call spread here . Buy NKE March 21 $90 call Sell Oct. 18 $95 call Why did I also include Lululemon, another athleisure laggard, in this? Unlike Nike, Lululemon is still growing, albeit slower than it had been previously. The slowing growth is one reason the company’s shares have fallen so sharply this year. LULU YTD mountain Lululemon, Year-to-date However, Lulu is now trading about 20 times forward earnings estimates, a significantly lower multiple than Nike, trading at 26 times forward profits. In fairness, the Street valuations suggest investors are providing Hill an ample runway to execute a product turnaround, but investors may want to look at Lululemon, too. Managing slower growth should theoretically be more straightforward than turning around declining revenues. One could, therefore, use a call diagonal in LULU as well. However, in the following example , I selected the slightly longer-dated November expiration, which captures the election but not the next earnings release, estimated for the 1st week of December. Buy LULU March 21 $290 call Sell Nov. 15 $310 call DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.