RIG – Transocean Ltd. – Shares of the international provider of offshore drilling services for oil and gas wells are currently up sharply by 7.85% to stand at $53.31 just before 12:30 pm (ET). RIG’s shares have roared back to life recently, rallying 28.55% in the past couple of weeks, from a 2-year low of $41.88 on June 9th, up to an intraday high of $53.84 today. Bullish options players populating the stock today are positioning for RIG’s shares to rebound higher by July expiration. Optimistic investors picked up approximately 1,000 calls at the July $55 strike for an average premium of $2.12 apiece. Traders long the July $55 strike calls profit if RIG’s shares rally another 7.15% from the current price of $53.31 to trade above the average breakeven point to the upside at $57.12 by expiration day next month. Buying behavior spread to the higher July $60 strike where at least 1,200 call options were purchased at an average premium of $0.73 per contract. Investors holding these contracts make money if shares of the underlying stock surge 13.9% to surpass the average breakeven price of $60.73 by July expiration. The overall reading of options implied volatility on Transocean plunged 17.1% to 61.61% by 12:35 pm (ET). The current 61.61% reading of implied volatility on the stock represents a 39.95% decline in volatility on RIG since volatility sky-rocketed up to 102.59% on June 9, 2010, the same day the firm’s shares plunged to a 2-year low of $41.88.
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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