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Noble Corporation plc Message Board

  • nysfparachute nysfparachute Mar 21, 2013 5:14 PM Flag

    Why selling puts on dips is good strategy

    I think selling puts on dips in NE is a very good risk/reward strategy.
    1. It has proven over the last few years to be a range bound stock. So selloffs are likely to be bought.
    2. The downside risks are well known and well publicized....ie. expense control, too much downtime, etc.
    More often than not, when the risks are known they are already accounted for in the stock price.
    3. There are enough positive catalysts to put a floor under the stock:
    A. Spinoff as mentioned by FBR.
    B. Management knows they need to get costs and downtime under control, they likely will.
    C. The stream of Newbuilds coming on line into a solid market for dayrates.
    4. Selling puts on dips gives you a good price buffer for further decreases in stock price....esp. if you are
    patient and do it progressively. Sizing is important because you may get put the stock and be forced
    to hold it for awhile until prices recover.
    5. While a big market selloff is always a risk, for awhile the bullishness of the market indicates to me that
    selloffs will be bought at least for this year.

 
NE
17.24+0.14(+0.82%)May 27 4:00 PMEDT