Stock / Symbol: Herbalife / HLF
Price at trade post: $42.70
Option Strategy: [/private_monthly]diagonal put spread[/private_monthly]
Reasoning: Thinking that the street's reaction to Carl Ichan's disclosed 12.98% state in HLF is over blown to the upside, I'm going to put on a downside directional bet using a [private_monthly]diagonal 42.5/40 put spread[/private_monthly]. With HLF announcing earnings next Tuesday, I consider this to be a highly speculative bet which is why I'm not risking much on the trade. I do, however like this trade's positive theta of 7.
Trade Details:
[private_monthly]
BTO 1 HLF Mar13 42.5 put
STO -1 HLF FebWk4 40 put
for a max net debit of $2.45 (current mid is $2.30). Day order, limit order.
Requirements:
Cost/Proceeds $245
Option Requirement $0.00
Total Requirements $245
Estimated Commission $3
[/private_monthly]
Max Risk: $245
Max Reward: $200 (80%) at $40 by Feb 22
Profit Range: $0 - $44 by Feb 22
