OptionsHouse

Options Trading News

January 18, 2013  Fri 5:15 AM CT

NE: SEE CHART GET CHAIN FIND STRATEGIES
Noble has performed well, and yesterday option traders were targeting the offshore-drilling contractor.

optionMONSTER's monitoring systems detected heavy call volume in the name, with 49,000 trading against fewer than 2,400 puts. Calls lock in the price where investors can buy shares, so they can generate significant leverage in the event of a rally. (See our Education section)

One big transaction was in the February 40 and 42 contracts. A trader bought the 40s for $1.13 and sold the 42s for $0.47, resulting in a net cost of $0.66. If NE goes to $42 on expiration, the trader will collect the $2 spread--a gain of 203 percent over cost.

The stock closed at $39.61 yesterday, up 1.67 percent. Earlier in the week, the February 38 calls traded heavily for $0.91 and more than doubled by yesterday.

The company will report earnings results on Jan. 23. Argus has cut its estimates, but that hasn't stopped buyers from piling into Noble.

Disclosure: I own NE calls.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Invest Like a Monster - San Diego: June 26-27

Premium Services

Education & Strategy

Investor deficiency in premium collection

Most investors have heard about selling options as a form of income generation. You hear it from brokers and financial advisors as a way to generate income without selling off pieces of your nest egg, dwindling through your retirement accounts, and then being stuck figuring out how to financially afford the rest of your life...

View more education articles »