Bulls Look for Herbalife to Bounce
By David Russell, reporter at OptionMonster
NEW YORK -- Herbalife (HFL) has been at the woodshed since April, but Thursday the bulls stepped in.
OptionMonster's tracking programs detected a surge of activity in the October 52.50 calls, with buyers paying 50 cents to 60 cents early in the session. Almost 11,960 traded in total, compared with previous open interest of 1,147 contracts.
Calls lock in the price investors must pay to buy shares, so they can generate some nice leverage in the event of a rally. That's exactly what happened, and those calls more than doubled to over $1.30 later in Thursday's session.Herbalife closed at $47.01, up 4.35%. The distributor of weight-loss products had peaked over $70 in the spring but cratered after hedge-fund manager David Einhorn raised questions about its franchisee relationships. The stock continued to fall despite quarterly results beating expectations in late July. Short interest is also 13% of the float, which could draw some buyers to the name. Overall option volume was 11 times greater than average in the session, with calls accounting for more than 80% of the total. Russell has no positions in HFL.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV