U.S. Markets closed

Is Herbalife losing its mojo?

Chris McKhann (chris.mckhann@optionmonster.com)

One investor thinks that Herbalife's run is over.

Some 15,000 options have traded in the healthy-lifestyle company, versus an average of 2,300. Most of that volume is in a three-way August spread.

The trader bought 4,300 August 60 puts for $2.65, sold 5,300 of the 50 puts for $0.75 and sold 4,300 of the 80 calls for $2.00. The volume was more than 10 times the open interest at all three strikes.

The resulting position is very bearish, at least down to that support at $50. This could also be a put spread collar, protecting a long position in HLF against a drop down to that level. The short calls also limit the upside if shares continue higher, but the overall position is done for a credit.

HLF fell 1.30 percent to $69.28 in morning trading. It hit an all time intraday high of $72.11 on Monday. Shares have been trending higher from just above $50 since the start of 2012.

More From optionMONSTER