Options Trading News

January 18, 2013  Fri 5:15 AM CT

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


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »