Herbalife Afterwards The January Alternative Expiry: Piece Of Job 1

I convey deliberately refrained from writing close Herbalife until the 17 Jan 2015 pick expiry.

We know from populace disclosures that Pershing Square (PSQ) had a huge put pick seat on Herbalife.

There were also a vast number of seat options that expired on 17 January.

Here are the outstanding in-the-money seat contracts equally at marketplace unopen Friday.

	issue	open interest
31.5	HLF150117P00031500	1,174
31.5	HLF150130P00031500	1
32	HLF150117P00032000	974
32	HLF150123P00032000	34
32	HLF150130P00032000	31
32.5	HLF150117P00032500	5,318
32.5	HLF150123P00032500	59
32.5	HLF150130P00032500	26
33	HLF150117P00033000	677
33	HLF150123P00033000	116
33	HLF150130P00033000	137
33.5	HLF150117P00033500	125
33.5	HLF150123P00033500	276
33.5	HLF150130P00033500	12
34	HLF150117P00034000	206
34	HLF150123P00034000	23
34	HLF150130P00034000	13
34.5	HLF150117P00034500	20
34.5	HLF150123P00034500	78
34.5	HLF150130P00034500	63
35	HLF150117P00035000	13,729
35	HLF150123P00035000	79
35	HLF150130P00035000	39
35.5	HLF150117P00035500	168
35.5	HLF150123P00035500	35
36	HLF150117P00036000	2,096
36	HLF150123P00036000	2
36.5	HLF150117P00036500	190
36.5	HLF150123P00036500	2
36.5	HLF150130P00036500	18
37	HLF150117P00037000	481
37	HLF150123P00037000	135
37.5	HLF150117P00037500	7,446
37.5	HLF150123P00037500	248
37.5	HLF150130P00037500	8
38	HLF150117P00038000	119
38	HLF150123P00038000	7
38	HLF150130P00038000	47
38.5	HLF150117P00038500	17
38.5	HLF150123P00038500	41
38.5	HLF150130P00038500	2
39	HLF150117P00039000	22
39	HLF150130P00039000	7
39.5	HLF150117P00039500	25
39.5	HLF150130P00039500	10
40	HLF150117P00040000	20,202
40	HLF150123P00040000	16
40	HLF150130P00040000	6
40.5	HLF150123P00040500	4
41	HLF150123P00041000	3
42.5	HLF150117P00042500	7,563
43	HLF150117P00043000	1
44	HLF150117P00044000	11
44	HLF150123P00044000	11
45	HLF150117P00045000	18,770
47	HLF150117P00047000	21
47	HLF150123P00047000	1
47.5	HLF150117P00047500	9,611
50	HLF150117P00050000	73,611
52	HLF150123P00052000	2
52.5	HLF150117P00052500	27,058
55	HLF150117P00055000	16,754
55	HLF150123P00055000	11
57.5	HLF150117P00057500	7,597
60	HLF150117P00060000	43,836
62.5	HLF150117P00062500	3,173
65	HLF150117P00065000	27,343
67.5	HLF150117P00067500	957
70	HLF150117P00070000	13,127
72.5	HLF150117P00072500	638
75	HLF150117P00075000	1,373
77.5	HLF150117P00077500	184
80	HLF150117P00080000	9,981
82.5	HLF150117P00082500	892
85	HLF150117P00085000	43
87.5	HLF150117P00087500	109
90	HLF150117P00090000	2,329
95	HLF150117P00095000	263
100	HLF150117P00100000	5,276
105	HLF150117P00105000	172
110	HLF150117P00110000	115
115	HLF150117P00115000	51
120	HLF150117P00120000	69
		325,520

They add together upwards to 325 chiliad contracts outstanding representing 32.5 i chiliad one thousand shares.

These options expired on Sabbatum morning time in addition to I presume that the stock has been delivered.

The delivery of these options may convey a profound consequence on the Herbalife portion register. These effects volition hold upwards component subdivision of this series. For reference at that topographic point are less than 82 million basic shares outstanding in addition to close 91 million diluted shares. However basic shares are the correct comparable because delivery has to hold upwards effected through basic shares outstanding.

It was to a greater extent than ofttimes than non assumed that these options belonged to PSQ.

Bill Ackman nonetheless has issued a denial. To quote:

To laid the tape straight, 97% of the Herbalife seat options owned yesteryear Pershing Square convey been extended in addition to convey expiration dates upwards until 2016.  The Jan seat options held yesteryear Pershing Square convey a strike toll of $US65 share. Pershing Square may pick out to extend, sell or practice the Jan seat options depending upon marketplace weather condition in addition to other factors.

Those inward the know convey understood that the options expiring on 17 Jan were not PSQ's options.

PSQ's pick seat inward Herbalife is an off-market position.

I know the contract terms as produce many others.

Some of the strikes are real unusual.

They include 44,362 telephone outcry upwards contracts [which I presume hedge a brusk position] expiring on 17 Apr with the real odd strike toll of $69.99. [The contracts stand upwards for 100 shares.]

They also include puts expiring xv May, 11,550 contracts with a $44.50 strike in addition to a farther 19,500 contracts with a the odd $49.99 strike.

There are a farther 25 chiliad contracts for calls with roughly other $69.99 strike.

I could croak on... in addition to on. Ackman's seat is good known amongst connected in addition to sophisticated longs.

Moreover similar many things that Bill Ackman says he is beingness cute-with-the-truth. Bill said his "puts" largely didn't expire on 17 January. He nonetheless owned a large number of calls that expired - in addition to these calls hedge the oversized brusk position. For event PSQ carried 4,375 telephone outcry upwards contracts that expired this weekend with a strike toll of $89.90. Presumably these hedged 437,500 brusk positions.

I wouldn't bother disclosing that I knew details of PSQs unlisted positions except that it is useful inward time to come posts.




John

Post script: If yous (like me) believe that Herbalife is a legitimate concern in addition to (like me) yous believed that the destination game was a soul equity bid - in addition to thence I convey a puzzle for you.

How could yous - knowing the item of Bill Ackman's seat - brand a exactly humungous amount of coin at to the lowest degree partly at the expense of Pershing Square in addition to their clients? Because I assure yous roughly people desire to play rope-a-dope with Mr Ackman. [If yous intend that Carl Icahn has really suddenly croak Bill Ackman's bosom buddy in addition to thence yous don't know Carl...]

Secondly: I suspect that this postal service volition elbow grease Pershing Square's purpose to hold upwards tranquillity in addition to unusually tense on Monday.

Can yous tell witch-hunt?

Sure, I knew yous could.