OptionsHouse

Options Trading News

November 29, 2012  Thu 4:16 AM CT

NBR: SEE CHART GET CHAIN FIND STRATEGIES
Nabors Industries has been holding long-term lows, and one large buyer is positioning for a gradual rebound.

optionMONSTER's trade scanners detected the purchase of 5,000 January 2015 20 calls for $1.70 yesterday. The volume dwarfed the strike's open interest of just 53 contracts at the beginning of the day, so this is clearly a new position.

The calls lock in a $20 entry price in the stock in the next 25 months. Those options will increase in value if the shares rise, potentially resulting in significant leverage relative to the underlying shares.

NBR rose 2.9 percent to $14.20 yesterday and has lost 18 percent of its value so far in 2012. The energy driller has managed to stay above its lows from earlier in the year, which could be leading some traders to expect a rally in the belief that it's at support.

Yesterday's call buying dominated option activity the name, which typically sees volume of fewer than 1,200 contracts per session. Calls outnumbered puts by 5 to 1.

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


Related Stories

NBR

Put selling bets Nabors will hold gains

September 14, 2016

The energy-drilling services company has jumped 6 percent in the last month, and one large trader apparently believes that it will hold firm.

OptionsHouse

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »