NE – Noble Corporation – Frenzied call buying activity on the offshore drilling contractor this morning suggests some investors are expecting Noble Corp.’s shares to rally ahead of July expiration. Shares are currently up 1.55% to $28.90 as of 11:15 am (ET), but earlier increased as much as 4.4% to secure an intraday high of $29.72. Investors are initiating bullish stances on the stock today although Noble was downgraded to ‘underperform’ from ‘outperform’ with a 12-month target share price of $32.00 at Credit Agricole Securities this morning, and yesterday was cut to ‘equal-weight’ from ‘overweight’ with a 12-month target price of $41.00 at Stephens & Co. Optimistic individuals picked up at least 10,100 calls at the July $30 strike for an average premium of $0.97 apiece in order to prepare for continued appreciation in the price of the underlying stock. Investors long the calls are positioned to make money if Noble’s shares rally 7.15% over the current price of $28.90 to trade above the average breakeven point at $30.97 by July expiration. The surge in demand for options on the offshore drilling contractor lifted the overall reading of options implied volatility 11.4% to 50.49% by 11:20 am (ET).
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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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