We compute the recoil polarization of the lambda hyperon and the photon asymmetry for the quasifree photoproduction of kaons in a relativistic mean-field approximation to the Walecka model. Our motivation for studying polarization observables is threefold. First, polarization observables are more effective discriminators of subtle dynamics than the unpolarized cross section. Second, earlier nonrelativistic calculations suggest that polarization observables are relatively insensitive to distortions effects. Finally, this insensitivity entails an enormous simplification in the theoretical treatment. Indeed, by introducing the notion of a ''bound-nucleon propagator'' we exploit Feynman's trace techniques to develop closed-form, analytic expressions for all photoproduction observables. Moreover, our results indicate that polarization observables are also insensitive to relativistic effects and to the nuclear target. Yet, they are sensitive to the model parameters, making them ideal tools for the study of modifications to the elementary amplitude-such as in the production, propagation, and decay of nucleon resonances-in the nuclear medium.