(HLF) War Over Herbalife ...

[MadMarketScientist 11]

With the big boys fighting over Herbalife, anyone think its a bad\good idea to put a straddle on it? This baby is going to move somewhere ...

 

MMS

[optiontimer 10]

I've had it on my trade watch for two weeks. If it trades below today's $38.03 low tomorrow (1/11/13), HLF is a short for me. My trade will be the Feb 32.5 put, preferably at $2 or better. At $2 or better, those are currently the best "bang for the buck," aka R:R ratio on a retest of the Dec $26.06 low close or even the 12/24 $24.24 low.

[MadMarketScientist 11]

Why only short and not a straddle? Moved up too far and fast?

 

Thanks for any insight you can provide

 

MMS

[optiontimer 10]

No special insight - I only trade with the trend. As I perceive it, the trend is down. So I am looking to sell after a pullback against the main trend just as the main trend again exerts itself.

 

If you were to throw HLF on a chart set up such as I use in the Optiontimer's Project thread, you'll see why I view it as a short. If you were to view it on such a chart, you will also see why I bought puts on HLF on Monday 11/26/2012. It's the same set up. I would love to have the same result, but that may be too much to ask for.

[MadMarketScientist 11]

Thank you, just to confirm you mean a chart setup like this?

 

The Red moving average is the 21 EMA

The Black moving average is the 65 EMA

The oscillator in the subpane is the 7 period stochasticRSI

 

thx

MMS

[optiontimer 10]

Yes. And nearly any combination of MA's can be used to define trend and nearly any overbought/oversold oscillator can be used to help time entries. Remember that overbought is, in my view, only useful in the context of a downtrend, and oversold is only useful in the context of an uptrend.

 

Also, support & resistance in the form of prior highs and prior lows is not to be overlooked. If price were to power through that 42.18 and closed above it, and especially if it had closed above 44.79, then nevermin whatever your indicators are telling you, and follow price action to determine which way is what.

[ntrader 10]

The war have just started so I have open a new trade for HLF: Long on February call with a strike of 45 priced at $1.60 per contract and long on February put with a strike of 35 priced at $1.90. Net Debit: $3.5 Max Loss: $3.5

[optiontimer 10]

I've had it on my trade watch for two weeks. If it trades below today's $38.03 low tomorrow (1/11/13), HLF is a short for me. My trade will be the Feb 32.5 put, preferably at $2 or better. At $2 or better, those are currently the best "bang for the buck," aka R:R ratio on a retest of the Dec $26.06 low close or even the 12/24 $24.24 low.

 

I'm liking the Feb 45 puts here with the stock at $44.00. The 40's do not look bad but they are tough to get right now for the right price.

[MadMarketScientist 11]

Looks like something is happening ... the SEC is making an announcement about a pyramid scheme ... hope it HLF as I'm short!

 

MMS

[MadMarketScientist 11]

Damn just heard its not HLF ... they will be next

[optiontimer 10]

I'm liking the Feb 45 puts here with the stock at $44.00. The 40's do not look bad but they are tough to get right now for the right price.

 

Those puts could have been had that day at $4. Last trade was $9.90 with a $10x$10.30 market at Friday's close.

 

Now if only I had a crystal ball to tell me whether $25 was in the cards before Feb expiration.

[ab456 10]

UPDATE 3-Herbalife slams news report of law enforcement probe | Reuters

[MadMarketScientist 11]

ACKMAN: 'Why Does Herbalife Have ATM Machines In Mexico?'

 

Read more: Herbalife Have ATM Machines In Mexico - Business Insider

 

 

My put is up a little money ... but I think this is going to be a winner for me!

 

MMS