Learn the trade here. Make it on tradeMONSTER

Options Trading News

May 28, 2013  Tue 3:47 AM CT

RIG: SEE CHART GET CHAIN FIND STRATEGIES
Transocean has been trapped in a range all year, but one trader is betting that the stock will go higher.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 June 50 calls for $1.97 and the sale of an equal number of June 55 calls for $0.27. Volume was below open interest in the 55s, so there are two possible explanations for the trade.

One is that the had investor previously owned those contracts and is rolling a long-call position to the lower strike, reflecting the drop in the oil-servicing stock. The adjustment cost $1.70 and keeps the calls in a close correlation to the stock price because it increased their delta. (See our Education section)

Alternatively, both halves of the trade may have been done to open new positions. In that case, it is a bullish call spread, also done for a cost of $1.70. The position controls the $5 spread between the two strike prices, translating into a profit of 194 percent on a move to $55.

RIG finished Friday up 0.19 percent to $52.06 and has been snaking in a range for months. Total option volume was more than twice the daily average, with calls outnumbering puts by 8 to 1.
Share this article with your friends


Related Stories

RIG

Transocean trader sees big move

April 9, 2014

A large trade combines stock and options in a strategy that will profit from a sharp move higher or lower in the offshore driller.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

When cash is king (of hedging)

Whether your trades are winning or losing, it can be tempting to add to your positions. But in either case,...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER