Stock / Symbol: Herbalife / HLF;
Price at trade post: $60;
Option Strategy: [/private_monthly]double calendar[/private_monthly];
Reasoning: The street is pricing in a big move on HLF following their earnings announcement Monday afternoon and we're going to take advantage of it. This [private_monthly]double calendar[/private_monthly] has a
Delta of .33, a positive Theta of 10, and a Vega of 15.3. Currently, the risk graph looks better to the upside than down but that will change on any increase in volatility.
Trade Details:
[private_monthly]
BTO 1 HLF Nov13 65 call
BTO 1 HLF Nov13 50 put
STO 1 HLF Aug13 65 call
STO 1 HLF Aug13 50 put
for a max net debit of $7.45 (current mid is $7.26). Day order, limit order. Try for the mid to mid +0.05. DO NOT ENTER THIS TRADE AFTER MONDAY.
Requirements:
Cost/Proceeds $745
Option Requirement $0
Total Requirements $745
Estimated Commission $6
[/private_monthly]
Max Risk: $745
Max Reward: $325 or 43% (at current volatility level) at $65 by Aug 16
Profit Range: $48 - $71 by Aug 16
Suggested Downside Stop: @ $50
Suggested Upside Stop: @ $68.75
