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RIG

WEEK OF 11/20: HIGH IV IN PETRO UNDERLYINGS; NOT MUCH ELSEWHEREAfter having gone through my usual routine of screening for high implied volatility rank/high implied volatility underlyings for plays this coming week, one thing stands out: the implied volatility is in petro, with stocks like CHK, SDRL, WFT, PBR and the like rounding out my top 10 IV list.* With OPEC talks approaching here, and "friskiness" in petro-based underlyings likely to ensue, I'm loathe to pile into more petro, particularly if it involves a bullish assumption. The "more likely than not" outcome is no meaningful OPEC agreement as to cuts, which means oil down, which means further long opportunities below somewhere. If the contrarian outcome comes to pass (i.e., "meaningful cuts"), well, then I've just plain ass missed an opportunity to add long positions here and will have to make do with the bullish assumption positions I've got on here. That being said, the "Top 10" list isn't entirely bereft of possibilities, depending on your risk tolerance and aversion to roller coasters. For example, GPRO may be worth a bullish assumption play here on the notion that Christmas sales of its drones will be "brisk," something we probably won't know unless GPRO discloses its unit sales before its Q4 earnings announcement next year. The nearest to the 20-delta strike short put, 45 DTE, however, is the Dec 30th 8.5, which would bring in .36 ($36)/contract at the mid -- not exactly something that gets me excited. Even assuming I wanted to go nondirectional (short strangle/straddle, iron condor/fly), I can't squeeze enough out of those setups premium wise to make it worthwhile. VRX is, well, VRX. The Dec 30th 14.5 short put (currently the 19 delta) goes for .66 ($66) at the mid price. That isn't bad, but I have to put up with sitting on pins and needles for 5 weeks or more with that setup. The alternative would be to go with a defined risk setup (not keen on being caught undefined in a potential whipsaw). Even there, however, an iron condor won't pay out at least 1.00 in credit without forcing the wings in beyond the 1 SD (I prefer more room with volatile biotech), and I'm not sure that I would want to go with the narrower breakevens of a fly, in spite of the fact that the credit I'd receive at the door would be more than sufficient. (A Dec 30th 13/18/18/23 iron fly would bring in 2.78, for example). Well, what about AMD? That's in the list ... . Like its semicon counterpart, NVDA, AMD's been on a rip and the place to have gotten in was lower for a bullish assumption play (scratches "short put" off his list). And nondirectional doesn't pay enough: the Dec 30th 8.5 short straddle would bring in a 1.44 credit at the mid (I like to get at least 2.00 out of those); the 7/10.5 short strangle, .40 at the mid. Defined risk (flies, condors) will bring in even less. CLF? Same deal (can't get much out of the 45 DTE 20 delta short put; short straddle/strangle, iron condor/fly bring in too little premium). Ugh. Sometimes, these holiday weeks are best for hand sitting ... . Looks like this is going to be "par for the course." * -- The top 10 implied volatility stocks (in descending order): CHK, WFT, VRX, CLF, AMD, GPRO, PBR, RIG, VALE, CX, UNG.
AMEX:XOP
by NaughtyPines
THE WEEK AHEAD -- FOMC, FOMC, FOMC; LONG VIX; OIL; EARNINGSHere's what I'm looking at for next week: VIX/VIX PRODUCTS . VIX finished last week at 16.50. I will look at VIX/VIX product setups early next week depending how the "horse does at the gate" (Monday). If we see a tight range in the S&P like we did pre-Draghi in prepation for FOMC, VIX could drift go a little lower Monday through Wednesday, in which case I will want to use VIX, VIX, or UVXY to go "long volatility." Index ETF's . There is little sense in selling April expiry premium here in broader index instruments with VIX the way it is. Brazil, oil/gas, and the gold space continue to have the volatility, but I'm already in all of the underlyings that have any juice in their options that are at 70+ implied volatility rank (UNG (covered call), EWZ (iron fly), GDXJ (short strangle), RIG (short strangle), GLD (credit spread), and XOP (short strangle) in those sectors. If you look at SPY implied volatility month-to-month, it doesn't approach something "regular" until the June expiry (19.9%), so I may look to set up some small premium selling play in the June expiry on the possibility that low volatility sticks around for a period of time and to have something in the queue for that event. Trying to sell 45 DTE premium in the index ETF's in a period like we had last year between mid-March and late August was a total slog ... . Oil . The 2016 high was set on 1/4 at 35.36 in USOIL. it tested the underside of that level Tuesday, Wednesday, and Thursday of last week and broke through it by a whopping .20 cents on Friday, so who knows whether that'll hold. If oil caves, the S&P will follow hard (the S&P currently has a .93 correlation with USOIL). However, oil has a tendency to enter fairly lengthy consolidative periods before moving directionally forward, so be prepared for oil to taunt you with both suggestions that it's going to break significantly higher and indications that it's going to totally implode ... . If you're into trading spot forex, watch oil's effect on the petro currency USDCAD. The Loonie may get a double whammy from a cave in oil plus Fed tightening/dovish-hawkishness. The Loonie's entire strength profile from 2/11 is largely on the back of oil. EURUSD. This is the strong/weak pair to watch post-Draghi and running up into FOMC. For me, this is not a pair I would mess around with "playing in the middle" between 1.08 and 1.10. As I did last year, I would wait for it to hit 1.14 and then go short if it's inclined to react to the upside on whatever FOMC says; otherwise, stay out. The fundamentals on this pair should be telling everyone to only short on strength (ECB easing; Fed tightening), as attempting to play the 200 pips between 1.08 and 1.10 has been and is likely to continue to be somewhat discouraging as it looks to find its footing in the larger range between 1.14 and near parity. EARNINGS. Although the earnings season has been described as "over" for this quarter, there are a few issues that are still due to report that might be worth playing, assuming that the volatility is there: ORCL (Tuesday, after close), FDX (Wednesday after close), and ADBE (Thursday, after market close). As it stands right now, none of those meet my implied volatility rank rules (70th percentile plus), with all three of those having percentiles hovering around 50, but naturally that might change running up into the actual announcement.
FX:USOIL
by NaughtyPines
RIG - May consolidate/channelRIG exploded past its anticipated resistance at 12, settling at 12.71. In fact its price and volume have been increasing massively each day for a week now. I'm hesitantly expecting the price of this stock to increase further, but the timeframe is unclear. It's quite possible that we have a bit of a gap on monday, and it opens high. I do not expect the stock to exceed resistance at 14.45. The market is less risk averse than it has been - but large question marks remain for oil companies and a price surge above the levels seen over the summer would be unexpected at this point. The price has move so high so fast that soon, possibly as soon as first thing monday (especially if the stock opens high) I would expect to see more and more investors taking profits and the price to drop back down. The selloff should take the stock at least to its support at 12, and I expect it to trade and consolidate between 12 and 14.45 until more definitive news pushes it one way or the other. If the stock does perform as I expect and oscillates between those two levels for a few days buying at 12 could be a good position to take for a few days, taking profits ASAP with a mind to the ease with which the price could plummet. The same is true of a short position taken at 14. Again, both strategies are predicated upon the stock establishing resistance at 14 and support at 12 and trading between them. Its entirely possible RIG explodes up above 14 again in a single trading day because of huge short covering, or that investors take their profit now in such a massive selloff that we drop below 12. I trade risk-averse, and will not be jumping into this stock either way as things stand right now - especially since traders have had all weekend to mull things over.
NYSE:RIG
by tapkcir
A level for Diamond Offshore drilling accumulationKey reasons for taking a position: Triple RSI divergence, with lower low price made for every higher highs in RSI Velocity of the crash is getting steeper by the day! 77 degrees Price is close to the 2003 support lows. Take your time in building a position gradually over time, as I'd still want to wait for the final indication to go all-in for a confirmation of a reversal. Keep a look-out for the dollar-normalized volume indicator (price X volume). This indicates the general interest in the stock regardless of price level, as a higher price leads to less stock being traded. Take-profit level is set at 0.236 fib retracement level, or the falling trendline since 2008 peak relative to the start of oil crash. >> Be prepared for the price to hit $11, the IPO level. I'd advise not to risk over 10% of your portfolio, although there's a low probability of it happening but it is still possible. Good luck! And stay objective, don't let your bias dictate your positions. I trade technically, fundamentals do not matter much to me as they often lag behind what's already happening. Human sentiment dictates the price more.
DLong
by LastBattle
1
Oil drillers - way overdue for a huge bounce This is a time where all fundamentals about the oversupply of oil, glut, and worsening global economy should be ignored. It is simply so oversold that it in the near term it will vastly outperform most other assets. There's simply a limit to how low it can get before it bottoms. No, WTI (USOIL) isn't going to $20 in the near term yet. I do see a possibility of it testing $48~51 range again. Seadrill Limited (SDRL) Almost 20% away from the lows made in 2009. Price have not recover the slightest bit despite oil price recovering recently. Near term target is $9.5 range. Best of the 3 drillers and current price is a huge bargain here! I am accumulating this at current levels. Transocean LTD (RIG) Price recovered 27% from the recent lows. Not much opportunity unless you're going to hold it for over a year, a recovery to $26 is almost entirely possible. I would wait for a retest of $12 to pick this up. Diamond Offshore Drilling Inc (DO) Keep a lookout for $17~19 level for longs. I don't see much demand in this relative to SDRL and RIG yet. WTI price: ----------------------- Good luck :) and have a good trade.
NYSE:RIGLong
by LastBattle
6
A bit more downside to comeThere's a strong support for oil at $37.72 and I believe that will be the bottom in the coming months. It is only bouncing given the extreme oversold condition and that does not change the fundamental fact of an over supplied oil market and many more that are stored in offshore tankers. I highly doubt the long term log trend in black will hold. (Temporary bottom of $47) At this point you wouldn't want to be shorting, other than waiting for an opportunity to long once the confirmation is in. UWTI USO SDRL XLE
FX:USOIL
by LastBattle
3
Transoceans Timewindow.The stock is certainly in a longer downtrend. A Turnaround is to early to tell - Even though, it can be time to start looking at a longer term Long position in the stock. Looking at the timecycles "Low to Low" from 2004 - present, It seems to come in a cycle Low every 76 to 81 weekly bars or every 500 to 550 days. We might now be at week 77 from an earlier Low. The chart shows the different Low points. The RSI indicator is presently seldom this extremely low at 7.5. Low RSI readings in December of 2008, June of 2010, December 2011 sparked impressive advances. Time will show if this instance comes in to play again with a low around x-mas time of 2014 or maybe aleady in place 2 days ago..
NYSE:RIG
by xau.se