RIG and ESI rollout options.
RIG has several options as does ESI, it all depends on your risk tolerance.
and feel for overall direction of the market.
If you feel we have a correction coming after this extensive runup, you can
roll the RIG out to February and sell the 100/105 call credit spread.
You can look to recoup some, most or all of your initial loss from the January close out, but you have to double the initial number of contracts. ( so if you sold a 10 contract spread you would use 20 contracts. In addition, if you feel that RIG will trade in a trading range between now and February expiration you can place on an iron condor where you sell both credit spreads on both the put and call side. ( sample seen below with closing prices from Friday and option bid and ask. )
At the bottom of this newsletter you will find a technical chart to give you the best idea of where the resistance and support prices are based on where the stock is currently trading after this run up on both RIG and ESI. ( see below )
Below are several options that you can consider based on your risk tolerance.
If you roll out the iron condor and double both sides, as you can see the reward will more than offset your January loss. But beware that you now have
twice as much risk if either side should go against you and if you need to roll again it will take 4 times your initial position.
RIG iron condor with 20 contract roll. ( risk/reward and margin requirement )
The same can be done with ESI as seen below.
RIG and ESI charts below
My major concern is that, eventhough we are do for a pullback of some kind, that is never guaranteed. In addition, both of these stocks will report earnings before the February option expiration cycle is complete. I hate to hold over earnings except in rare cases, but I hate especially recommending holding positions of high volatility stocks and stocks trading over $80 or more a share.