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SeaDrill Limited Message Board

  • douglassgraem douglassgraem Jul 9, 2013 10:47 AM Flag

    Do SDRL leap options have NO PREMIUMS?

    Request some enlightenment as I see virtually zero premiums on some leap options which "mature" in about 18 month!!! Does that imply the option gurus don't expect only minimal improvement in SDRL earnings + market price this year or next?????? Is it a no confidence vote on SDRL? Or an "unintended" consequence of a "100%' cash dividend policy = that is, the market NOT liking it?
    Have traded options for a long time but have not seen anything like this ever before. Thank u in advance + wish all happy investing!

    Sentiment: Buy

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    • Which strike are you looking at? The $42 Jan 2015 have a bid/ask of $2.40/$2.75. While someone with a high degree of confidence in SDRL might see that as "virtually zero" others worried about the debt and the dividend sustainability might see it as "expensive". Personally, I think it is pretty darn cheap as it implies 8% upside only. Take DRYS leaps for instance, $2 Jan 2015 calls have a bid ask of $0.51/$0.60. That implies upside of nearly 40%. Betting on JF v. Economou would seem to favor SDRL leaps.

      • 1 Reply to audiophul
      • MANY THANKS for enlightenments!! Remember I made 500Plus% mega gains in RIG leaps a few years back IMO SDRL is a much better managed company than RIG, SDRL leaps are real head scratchers because the negative zingers about SDRL pushing the envelop on the high payout appear to do great harm to SDRL's price's longer term performance. Lets be patient...Thanks again!

        Sentiment: Buy

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