NEW DIRECTIONAL CALL PLAYS
Transocean Ltd - RIG - close 58.82 change +3.52 stop 53.40
Transocean Ltd. (Transocean) is an international provider of offshore contract drilling services for oil and gas wells. As of February 2, 2010, the Company owned, had partial ownership interests in, or operated 138 mobile offshore drilling units. As of February 2, 2010, its fleet of 138 rigs consisted of 44 High-Specification Floaters (Ultra-Deepwater, Deepwater and Harsh Environment semisubmersibles and drillships), 26 Midwater Floaters, 10 High-Specification Jackups, 55 Standard Jackups and three Other Rigs. In addition, it had five Ultra-Deepwater Floaters under construction. The Company operates in two segments: contract drilling services and other operations. Contract drilling services, the Company's primary business, involves contracting Transocean's mobile offshore drilling fleet, related equipment and work crews primarily on a day rate basis to drill oil and gas wells. The other operations segment includes drilling management services, and oil and gas properties.
Target(s): 62.95, 64.50, 66.50
Key Support/Resistance Areas: 55.50, 58.35, 63.90, 64.90
Time Frame: 2 to 4 weeks
Why We Like It:
RIG exploded on Friday after BP's new CEO said that BP does not intend to seek compensation from RIG for the oil spill disaster unless the DOJ finds gross negligence on their part. Reports from FBR and BofA/Merrill state that they don't believe the DOJ will be able prove gross negligence. RIG is also a cheap stock trading at a PE below 7. Technically, the stock broke out of a downward trend line that started on May 27th on heavy volume. The stock has made a series higher lows and higher highs which I think will continue. I suggest we open positions at current levels. More nimble traders may want to time an entry on a retracement of some of Friday's gains or a breakout above Friday's highs. Our initial stop will be $53.40.
Suggested Position: Buy November $65.00 CALL, current ask $2.09
Annotated daily chart:
Entry on September xx
Earnings 11/3/10 (unconfirmed)
Average Daily Volume: 8 million
Listed on September 11, 2010