RIG – Transocean Ltd. – Bearish traders rigged up pessimistic plays on Transocean Ltd. throughout the trading session with shares of the drilling services provider down as much as 10.4% to an intraday- and new 52-week low of $44.05 in morning trading. Currently Transocean shares are down 7.00% to stand at $45.73 as of 3:17 pm (ET). Near-term bears expecting RIG’s share price to continue to falter sold 5,400 calls at the June $50 strike for an average premium of $1.08 apiece. Call-sellers keep the premium received on the transaction as long as RIG’s shares trade below $50.00 through June expiration. More pessimistic players sold 3,500 now in-the-money calls at the June $45 strike at an average premium of $3.01 each. Investors short the June $45 strike calls walk away with the full premium pocketed today if shares of the underlying stock do not exceed $45.00 at expiration. Longer-term bearishness appeared at the August $40 strike where it looks like one investor purchased roughly 7,100 puts for an average premium of $3.19 per contract. RIG’s shares must decline at least 16.4% from the stock’s new 52-week low of $44.05 in order for the put buyer to garner profits beneath the effective breakeven price of $36.81 by August expiration day.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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