Traders see Herbalife holding gains

By David Russell,

Shutterstock photo

Herbalife gapped higher on blowout results yesterday, and one investor is apparently confident that it will hold the gains.

HLF Chart optionMONSTER's tracking systems detected the sale of about 3,000 September 50 puts on the herbal supplement maker for $1.15. Volume was more than 12 times open interest in the strike.

HLF is down 1 percent to $54.38 in morning trading, but the stock is up 18 percent in the last month and hit a new all-time high yesterday after reporting its best quarter ever. Sales and earnings crushed forecasts, while management raised guidance and boosted the dividend.

The company said it's benefiting from demand for weight-loss products, plus better customer acceptance and a new club format that's helping distrbutors increase sales.

Today's put seller is betting that HLF will remain above $50 through expiration and, if right, will keep the premium received. Given that this price was the approximate location of resistance earlier in the year, this trader may be expecting support at that level.

The transaction pushed total option volume in the stock to more than 5 times the average level, according to our screening programs.

(Chart courtesy of tradeMONSTER)

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This article appears in: Investing Options
Referenced Stocks: HLF

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