Transocean has been rebounding with bullish option activity in recent weeks, and those positions are paying big returns once again.
On Sept. 14, Investitute’s proprietary programs cited the purchase of 9,000 October $10 calls for $0.25 with shares at $9.33. These were clearly new positions, as volume was well above the strike’s open interest of 1,762 contracts.
Those calls traded up to $1.27 today, more than 5 times their original price. The stock rose 7.5 percent in the same time frame, showing how options can far outperform their underlying shares. It was the third winning call trade in Transocean posted on Investitute in the last month.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
RIG jumped 7.67 percent to $10.03 today. The offshore driller, which has been resuming operations in the wake of Hurricane Harvey, has benefited along with other energy producers from the recent rally in oil prices.