NHTC shorts are sidelined by today's big bear gap
The plummeting shares of Natural Health Trends Corp. (NASDAQ:NHTC) are among the worst of the Nasdaq today -- down 23.8% to trade at $15.05, at last check -- after coming under scrutiny in a segment aired by China Central Television (CCTV) this weekend. Specifically, the report alleged that the e-commerce brand is operating illegally in China.
The company denies these claims, saying that they believe short sellers negotiated with CCTV associates in creating what Natural Health is calling "a deceptive expose... attempting to misleadingly portray the business as a pyramid scheme."
The shares were already struggling before today's bear gap, however. NHTC stock fell nearly 20% last quarter, and broke below its 200-day moving average in mid-December after a lengthy stretch above it. Earlier today, the security was trading as far south as $13.40 -- not far from the 52-week low of $12.76 set on Jan. 17, 2018.
Options bears are swarming the stock right now, too, with 1,275 puts traded so far, roughly four times the expected intraday volume. The most active option is the front-month January 12.07 put,where 506 contracts have traded. Today's volume is outstripping open interest, so new positions are being opened at this out-of-the-money strike today.
Short sellers have been actively targeting the stock too, which has likely added headwinds. Short interest is up 7.5% in the past two reporting periods, and now totals 1.41 million shares. These pessimistic positions represent 22.3% of the equity's available float. At NHTC's average daily volume, it would take over a month for traders to buy back these bearish bets. Shorts are sidelined at the moment, however, with Natural Health short-sale restricted due to today's bear gap.