Spike In Herbalife Ltd. (HLF) Put Options Raises Insider Trading Alarm

When Herbalife Ltd. (NYSE:HLF) announced that it had received a civil investigative demand (CID) from the Federal Trade Commission (FTC), most people knew that it was a real possibility (even those who support the company are aware of widespread criticism). But predicting exactly when a probe would start is another matter entirely, which is why a sudden spike in put options before the announcement has people calling foul.

Yesterday, the finance blog Bored with the Noise noticed that there was a lot of activity before the announcement and before trade on the stock was temporarily halted.

Hunting puts with an elephant gun

“Before the Wednesday halt, while the stock was up roughly 5%, there was a flurry of activity in Herbalife...