Stock / Symbol: Herbalife / HLF
Option Strategy: diagonal put spread
Trade entry date / price: Feb 15 @ $42.70
Price at this post: $39.40
Reasoning: HLF is down 8% from our trade entry, and our position is up around 20%. Even if HLF doesn't pop on earnings, there's the near certainty that volatility will drop following this afternoon's earnings announcement. This trade is hurt by lower volatility. Although I'm potentially leaving a lot more profit on the table, I'm going to book the win here. Current greeks are: -7.3 delta, 16.6 theta, and 2.3 vega.
Closing Trade Details:
STC 1 HLF Mar13 42.5 put
BTC -1 HLF FebWk4 40 put
for a min net credit of $2.95 (current mid is $3.05). Try for the mid less .05. Day order, limit order.
Max Risk: $245
Max Reward: $200 / 80% (at current volatility level) at $40 by Feb 22
Profit Range: $0 - $44 by Feb 22
Realized Profit / Loss upon fill @ $3.00: $55 or 22%
