Option Bears Cheer as Ackman Slams Herbalife Ltd. (HLF)

Herbalife Ltd. (HLF) touched a two-year low after being compared to Bernie Madoff

Jan 7, 2015 at 12:10 PM
facebook X logo linkedin


Herbalife Ltd. (NYSE:HLF) is up 2.5% today to trade at $31.17 -- despite earlier reaching a fresh two-year low of $27.60, after long-time critic Bill Ackman weighed in on the nutritional supplements stock. Specifically, the hedge fund manager predicted HLF will miss its current-quarter earnings forecast, and compared the company to scam artist Bernie Madoff. Meanwhile, option bears are hoping the equity will resume its earlier downtrend.

During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), HLF has tallied a 10-day put/call volume ratio of 3.22, with long puts more than tripling calls. What's more, this ratio ranks in the 86th annual percentile, suggesting speculators have displayed a healthier-than-usual appetite for bearish bets over bullish of late. Similarly, the security's Schaeffer's put/call open interest ratio (SOIR) of 2.39 is higher than 82% of comparable readings from the last year.

Puts are again popular today, with the contracts crossing the tape at over two times the average intraday rate -- and easily outstripping calls. Some of this activity may spring from the fact that HLF is on the short-sale restricted (SSR) list for the third straight day, as bearish speculators look for alternative ways to place their bets.

By no means is negativity confined to HLF's options pits, as short sellers have zeroed in on the security. A lofty 39.5% of the stock's float is sold short, and would take nearly four weeks to repurchase, at typical daily trading levels. By the numbers, just under 30 million shares are sold short -- higher than all but one reading taken in the last year.

Of course, a hefty portion of those short positions belong to Ackman. Even before today's insult, he repeatedly referred to Herbalife Ltd. (NYSE:HLF) as a "pyramid scheme."

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI