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Option Trends: Herbalife Ltd. and Priceline Group Inc

Skeptical traders have been picking up put options on HLF and PCLN

by 6/26/2014 12:36:04 PM
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Options traders have been taking a bearish tack toward nutritional supplements specialist Herbalife Ltd. (NYSE:HLF) and online travel firm Priceline Group Inc (NASDAQ:PCLN), according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, while HLF is trading just below familiar resistance, PCLN appears to be resuming its longer-term uptrend after meeting up with support.

Herbalife Ltd. (NYSE:HLF)

During the past 10 trading days, speculators on the ISE, CBOE, and PHLX have bought to open 3.24 puts for every call on HLF. This ratio ranks above 98% of other such readings taken during the past year, as options traders have rarely shown a greater preference for bearish bets over bullish.

Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) weighs in at 1.22, with puts comfortably outnumbering calls among options set to expire within three months. The current SOIR stands in the 72nd percentile of its annual range, confirming a heavier-than-usual skew toward puts over calls on HLF.

Shares of Herbalife Ltd. (NYSE:HLF) are down more than 18% year-to-date at $64.40, considerably lagging the broader equities market. The stock is currently pinned below its 40-week moving average, which hasn't been surmounted on a weekly closing basis since March 7.

Priceline Group Inc (NASDAQ:PCLN)

Puts have also been in heavy rotation on PCLN, as evidenced by the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.22. This figure ranks higher than 82% of other such readings taken over the past 12 months, pointing to a stronger-than-usual appetite for puts over calls.

PCLN has edged modestly higher since announcing its $2.6 billion acquisition of OpenTable Inc (NASDAQ:OPEN) earlier this month. Shares of Priceline Group Inc (NASDAQ:PCLN) have recently found support at their 40-day moving average and the round-number $1,200 level, and they're now docked at $1,222.89 -- on pace for a second consecutive close atop their occasionally troublesome 80-day trendline.


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