Sold to open RIG 7/8 expiration $12 strike calls

action

Sold short 10 contracts of RIG 7/8 expiration $12 strike calls at $0.82. Total proceeds after commission are $804.55 or $0.80/share.

strategy

I have been long Transocean (RIG) for about two months. The position is profitable and, at a current stock price of $12.75, has reached its target. I am a bit nervous about the ability of RIG to hold up, if crude oil came under more pressure. At the same time, I do believe that the floor is in on RIG.

This all points toward selling relatively deep in-the-money calls. That’s what I did, here. I am picking up a tiny bit of premium over the current price (hardly any, really). But the more important aspect to me is that, if the stock retreats below $12, I am still in it without taking the hit.

July 1, 2016 at 1:25pm · RIG · sell to open · options


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