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HLF Non Speculative Stock Replacement Example

|Includes:Herbalife Ltd. (HLF)

HLF Current Price $41.50 (April Expiration)

Scenario 1

Buy 41 Call -$3.50

Sell 43 Call - $2.35

Sell 38 Put - $1.80

a) You will be paid $.65 to initiate this spread

b) You can participate in the upside from $41-43 (+) $.65 received = $43.65

c) You will not experience a loss in this trade unless HLF falls below $38 (+) $.65 received = $37.35

d) This method will still profit $.65 even if the shares fall to $38.01, whereas owning the stock will produce a loss from $41.50 all the way down to that point.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: HLF