Bulls position for rebound in Nu Skin
The bulls want to give Nu Skin Enterprises a facelift.
optionMONSTER's Heat Seeker monitoring program detected a surge of call volume in the maker of anti-aging creams, which has lost almost half its value since the spring on worries about its business model.
Activity focused on the October 40 calls, which were bought for $1.57, and the October 45 calls, sold for $0.27. Roughly 2,000 contracts traded in each.
Known as a bullish call spread , the trade cost $1.30 to open and will generate a maximum profit of 285 percent if the stock closes at or above $45 on expiration. There was also subsequent buying of about 1,000 October 40 calls later in the session as another investor also positioned for a rally. (See our Education section)
NUS rose 2.27 percent to $37.85 yesterday, one session after hitting a 13-month low of $36.20. Shares peaked above $60 earlier in the year but plunged over the summer after professional short-sellers at Citron Research accused the company of running an illegal marketing scheme in China.
Management rejected the accusation and recently said will continue to expand its business on the mainland. Short interest also accounted for roughly 18 percent of the float as of Sept. 14, which could potentially draw buyers to the name.
Overall option volume was 6 times greater than average in the session, with calls accounting for four-fifths of the total.