GNC Holdings Inc (GNC) is a specialty retailer of health products in the U.S. and 54 countries around the world. The company’s stock is currently trading around $54.95 in a 52 week range of $30.92-$55.85. GNC has had a huge run this year, rallying over 66% year to date. After seeing some very bullish order flow in GNC yesterday we see continuation of that trade into today’s session. Yesterday a trader bought 2,000 GNC Nov 55 calls for $2.75. Earlier in today’s session we saw traders adding to this position, buying nearly 1,500 more GNC Nov 55 calls for $1.60. The chart is still supporting a long in GNC and continued buying of these calls confirms the rationale for a long. Today we will look at an options strategy that gets a trader long GNC, short premium, and short implied volatility. As always this trade also provides a great risk vs. reward set up.
Sell the GNC March 55-50 Bull Put Spread for $2.20 credit
Risk: $280 per 1 lot
Reward: $220 per 1 lot
Breakeven: $52.80
