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Herbalife Options Signal Large "Volkswagen"-Like Short Squeeze Bet

Tyler Durden's picture




 

While Carl Icahn admits 'modest' defeat on the Dell deal, he remains neck deep in Herbalife, and as we illustrated back in February, and warned earlier in January, it seems someone is betting right alongside him on a massive short-squeeze - a la Volkswagen. It would appear, someone decided that today was the day to buy 1000 lots (100,000 shares) of Jan 2014 $105 calls (implying an expectation of a 65% surge in price from here) and funded that by selling 1000 lots of the Jan 2014 $95 calls. Whether this is a hedge for Ackman (fearing the worst) or someone betting on an 'event' across the one-year anniversary of Ackman's big bet is unclear. One thing is for sure, if this pays off, we will see more tweets from the man himself...

1000x1000 in the 95/105 Jan 2014 Calls??!!

 

and judging by the post-trade moves in implied vol, we suspect it was a more aggressive long than a hedged short...

 

So it appears that this is a leveraged bet that HLF's stock price will reach above $105 by the end of Jan 2014...

 

Charts: Bloomberg

 

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