27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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There Is No Strong Short Thesis
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The short thesis against Herbalife's entire existence was two-fold, Ramey explained. First, Herbalife is an illegal pyramid scheme as the business model implies that no one buys its products for the product merits alone. Second, if Herbalife is indeed a pyramid scheme it is a matter of when, not if, regulators will shut the company down.
None of these theories gained validation Monday.
But there is also a third short thesis which doesn't suggest doom-and-gloom for Herbalife, rather a slowdown in sales that would justify a change to financial models, the analyst added. In this case, the short thesis is "completely plausible," but the company's announcement also dispels this view since it consists of a call-down in sales guidance but a boost in its earnings per share guidance.
In fact, Ramey's own estimates were calling for a soft sales and above-guidance earnings per share in the quarter, which implies the analyst won't be making any changes to his model.
"While we don't believe HLF is in decline, we do believe that that the deceleration short thesis is wrong, even if is right on the deceleration," Ramey concluded. "[Consumer Packaged Goods] companies declining in reported sales are, today, the rule rather than the exception. HLF comps itself against a field of companies that are much more richly valued, yet struggle to find top-line growth."
At last check, shares of Herbalife were down 6.43 percent at $69.17.
Related Links: Mid-Morning Market Update: Markets Mostly Flat; Herbalife Expects Lower Q2 SalesHerbalife Under Selling Pressure After Issuing Lower Guidance27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.