RIG Analysis

Transocean Ltd. (RIG)

RIG publishes earnings on Wednesday after the closing bell.

I shall use options that trade for the last time nine days hence, on Aug. 11.

Implied volatility stands at 55%, which is 5.5 times the VIX, a measure of the volatility of the S&P 500 index.

RIG’s IV stands in the 62nd percentile of its annual range and the 73rd percentile of its most recent broad movement.

The price used for analysis was $8.54.

Premium: $0.57 Expire OTM  
RIG-iron fly Strike Odds Delta
Long 10.00 89.8% 13
Break-even 18.50
Short 8.50 50.1 55
Short 8.50 50.4% 45
Break-even 8.07
Long 7.50 887.4% 10

The premium is 45% of the width of the position’s wings.

The risk/reward ratio is 1.6:1.

Decision for My Account

The RIG has grid deteriorated since I put the symbol on the agenda after Tuesday’s close, so much so that the risk/reward ratio, at 1.6:1, is higher than I allow myself to trade using the iron fly strategy. I’m passing on the trade.

By Tim Bovee, Fukuoka, Japan, Aug. 2, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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