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November 21, 2009
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NBTY Inc. (NTY)
January 14, 2009Dear Fellow Options Traders,
NBTY Inc. (NTY) is a manufacturer and retailer of nutritional supplements around the world. It markets its products under several brand names including Nature's Bounty, Vitamin World, Body Fortress, Rexall, Flex-A-Min, Met-Rx, etc.
The company is integrating the recent acquisition of Leiner, a manufacturer of vitamins and supplements, which went bankrupt in 2008. In November 2008, NTY missed earnings and assigned some of the miss to acquisition integration issues.
This week, option investors are betting that NTY's difficulties extend beyond Leiner and that the deteriorating condition of the company will lead the stock lower. Yesterday, 44 times the usual option volume traded. The flow was almost exclusively buyers of the NTY Feb 15 Puts. The February puts expire on Feb. 21, which should allow the company to report earnings before expiration on Feb. 16.
Given the track record of the company, the bankruptcy fate of Leiner and the unusual options volume, we recommend following this unusual flow by buying the NTY Feb 15 Puts (NTYNC) for $1.15 or better.
Have a great day trading.
Nick Atkeson and Andrew Houghton
Editors
Options Trader
