Trader smooths Nu Skin strategy

By David Russell,

Shutterstock photo

Nu Skin Enterprises has been ripping higher ahead of its earnings report next week, leading one investor to adjust the trade.

NUS Chart optionMONSTER's tracking systems detected the sale of about 1,675 May 30 calls, mostly for $3.52 to $3.58, against existing open interest. At the same time, a new position was opened in matching number of May 35 calls for $0.75 to $0.93.

NUS rose 5.8 percent to close at a record high of $33.56 yesterday. Fueled by the launch of the new LOC product, the maker of anti-aging treatments beat analysts' forecasts the last time it reported results on Feb. 4. The next release is scheduled for the pre-market on April 28.

The shares are up 37 percent in the last three months and just broke through the level where they traded in early 1997, shortly after going public.

Yesterday's call-roll strategy allowed the investor to recover about $2.60 of premium while remaining long exposure to the stock. It also increased the gamma from 5 to about 12, which means that the position will become more sensitive to changes in NUS's price as the shares appreciate. (See our Education section)

Overall option volume in the stock was 16 times greater than average in the session. Calls accounted for 95 percent of the activity.

(Chart courtesy of tradeMONSTER)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Options
Referenced Stocks: NUS

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