Let Charles Barkley Be Your Role Model, Get Fat Returns In Weight-Loss
By: Andrea Kramer
With the holidays officially in the rearview, it’s once again that time of year when Americans vow to burn off those extra pounds and take better care of themselves in the New Year. Companies like Weight Watchers have beefed up advertising, featuring Charles Barkley and Jennifer Hudson in advertising campaigns.
At a Thursday night Atlanta Hawks-Miami Heat NBA Game, Barkley was caught blabbing on a live microphone to his fellow TNT announcers about the “free money” he was getting from Weight Watchers for losing two pounds a week for a total of 38 so far.
Maybe Barkley won’t be the only one making money from the slim-down business. Shareholders of some of the big names in weight-loss could be looking at nice upside.
Here we take a look at options plays to capture potential upside in shares of Weight Watchers International, Inc. (WTW), Herbalife Ltd. (HLF), and NutriSystem Inc. (NTRI).
Weight Watchers
The shares of WTW have kicked off 2012 on a high note, with the stock already up more than 20% this week. From a longer-term perspective, the equity recently bounced off support in the neighborhood — home to its ascending 80-week moving average — and is set to end atop its 10-week and 20-week trendlines for the first time since mid-November.
This duo of moving averages ushered WTW significantly higher from late 2010 into mid-2011, and could once again emerge as another double-layered form of support.
Plus, the equity’s Relative Strength Index (RSI) sits at a meager 32 — on the cusp of oversold territory, suggesting WTW’s recent bounce could be just the beginning.
However, despite the solid start to the New Year, the equity remains surrounded by skepticism. The stock’s Schaeffer’s put/call open interest ratio (SOIR) stands at 1.72, indicating that puts comfortably outnumber calls among options slated to expire within three months. Furthermore, this ratio registers in the 88th annual percentile, implying that near-term options players are more put-heavy than usual on the diet concern.
In the same vein, the stock sports a 10-day put/call volume ratio of 1.62 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only does this ratio indicate that traders have bought to open more WTW puts than calls during the past couple of weeks, it also sits in the 81st annual percentile. In other words, options traders have initiated bearish bets over bullish at a faster-than-usual clip.
Let Charles Barkley Be Your Role Model, Get Fat Returns In Weight-Loss is a post from: The Forex Trading System Blog
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