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May 13, 2013  Mon 11:53 AM CT

RIG: SEE CHART GET CHAIN FIND STRATEGIES
A complex put strategy leads today's option activity in Transocean as decline.

More than 11,000 RIG options have changed hands today, compared to the daily average of 7,000 over the last month. Dominating the volume is one put spread that encompasses the next earnings report.

optionMONSTER systems show that a trader sold 3,500 August 47 puts for $1.04 in volume above previous open interest of 742 contracts. Seconds later, he or she bought 7,000 August 43 puts against open interest of 7,215 at that strike.

This could be a new backspread, which would mean the trader is hedging against a big drop lower by mid-August after Trina's next quarterly results. Or this could be a roll, with the trader buying back the short puts a that 43 strike and selling half as many puts at the 47 strike. In the latter case, the trader would be looking for RIG to hold above $47 through that August expiration. (See our Education section)

RIG is down 1.31 percent to $53.92. The offshore oil and gas driller posted a closing price above $55 last week, its highest since mid-February, as it came off the highs following first-quarter numbers last Wednesday. Shares bounced off support at $48 three weeks ago.
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The Problem with Trading Earnings

AP Options specializes in Swing Trading. Swing trading is the art of locating short term, quick, aggressive movements in a stock normally created by the technicals but, can be sometimes created by the fundamentals. These trades, at least in this service, last a couple of days to a week in the majority of cases.

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