Herbalife Ltd. (NYSE:HLF)

CAPS Rating: 1 out of 5

A global network marketing company that sells weight management, nutritional supplement and personal care products.

Recs

0
Player Avatar TrackMagicFormul (92.63) Submitted: 12/28/2012 11:04:38 AM : Outperform Start Price: $27.79 HLF Score: +55.23

Investors should consider selling puts. You can achieve some very high annualized returns at strikes significantly below the current price. e.g.

Feb 13 $22.50 strike at $1.40 has 29% discount and 47% annualized return.

Member Avatar TrackMagicFormul (92.63) Submitted: 1/3/2013 12:41:33 PM
Recs: 0

As an example of how fast puts can lose value when stocks rise, the Feb option is now trading at 55 cents after 6 days. HLF is now $35.50. To compare, the option lost 60% of its value when the stock rose 28%. But here buying the stock would have far outperformed selling the put while holding cash, as the put seller has so far only made 95 cents on their $21.10 in held cash, or 4.5%.

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