Pinned @ 55. 4k shrs. Maybe only the 2nd time this year I've been in this is any size.
The price will be under pressure till year end, jan to april usually better, as you know, Chute.
And Happy Holidays to you too Turbo. Nice to see you're still around.
All the drillers have had a choppy, sideways year. Nothing unique to NE there. It's offered a steady percent or two per month in swing trades and options, but in a year when the market broadly rose, that's not really much to brag about.
Yeah, you look at that sawtooth chart, bouncing back and forth from the mid 30s to about 40, and it's a little hard to see how the underlying business is represented. It's been a trader this year, not a buy and hold name.
And yes, that beeping sound you might have heard was the options expiry backing up and dumping a whole lot of shares on me for 36 and change. I was a little impatient, I guess, selling all those 37s when I'd done well this year selling 35s and 36s time after time. I just thought the underlying fundamentals made a trip down to the mid 30s less likely than it had been.
On Monday I immediately sold this week's 37.50 calls to push down my basis another quarter (or take a quick profit if it bounced, which it hasn't). It's small-ball investing, but if you repeat it lots of times a year, you do pretty well with Noble, even if the the yearly chart is a sideways sawtooth.
I think similarly, and have sold puts to add at 55 this month and next.
It may well fall into the lower 50s, just because that's what cyclicals like esv and ne do from time to time, but given the dividend support, I'd see that as time to take a large position.
I've just sold 80 contracts of the 12/13/13 37's. So, very much in accord with you Chute.
I had been selling 36s most of the year, but the lows on the chart seem to be methodically creeping up, even if the 40-ish highs are stubbornly in place. Perhaps this is an ascending wedge, our more technically oriented folk can weigh in on that. In any case, I like the risk/return at these price points.
Why would the government get out of the oil business? They get a huge public subsidy, on the backs of the shareholders. They get big jobs programs in ship building and support industries thanks to local content rules. They get away with wildly over budget refinery projects, because they're not really answerable to market forces.
You may be right for a trade, but until they get a new government, this is a very risky investment.
A deal with Iran, which threatens to push oil down over the longer run, pretty much trumps whatever little blip would occur because of a slight increase in heating oil demand. I think the Northeastern states have some of those poor folks who are still stuck with oil instead of gas heat. Given the relative costs of BTUs, it's gotta be a rapidly falling number.
Because there's money to be made on pinning when options expire, but only then.
And if you recognize whats going on, there are modest profits to be made on a regular basis.
That was my comment BTW.
You can make a little money on a pin, but just a little. I sometimes trade options pins on aapl, never done so here.
Pretty broad down day for oil service, notably NOV down 3.5% at least for a moment . NE and it's peers all appear to be responding to oil's step away from $100.
It's not level so much as direction, I suppose. There's plenty of profit offshore with 96.50 oil, but if the trend feels like it's heading south, you get selling.
So, no break-out for NE today, just more bouncing along in it's tight bound around 38. Probably yet another opportunity for the range traders. I'll probably sell some November calls into this.
Interesting that NE's within spitting distance of the lows over the past 6 months. As you say, probably a trading opportunity. Oil is pressing down towards psychologically significant levels, which may be the reason for the weakness, but otherwise this seems not particularly merited by the fundamentals.
I have a truckload of 36s and some 35 puts expiring, presumably worthless. Not sure when I will sell more, although the array of dates and strikes for NE options has recently become very large. Weekly options, 50 cents spacing.??.... sort of a puzzling situation for a fairly quiet stock with moderate volume. Especially puzzling compared with ESV, a very comparable enterprise, which has only monthly options with 2.50 spacing.
It looks like somebody made a highly levered, very short term options bet on the market responding positively to this earnings announcement. That such a bet was made just before a substantial positive earnings surprise, makes one suspect a little information leaked out.
But for one reason or another, their lottery tickets appear to be headed towards worthlessness. But that's the high-risk, high-rewards world of short term call buying, I suppose.
I think it's a safe bet that most of us lost a bunch 5 years ago. I know I took a real beating, as my formerly profitable approach of buying and holding cyclicals, come what may, just got crushed. I capitulated way too late in the decline, and the only thing that eventually redeemed me was that after sitting and gathering my scattered wits for a while, I got back in for the ride up. Even if on paper I eventually got my money back, the whole deal left some marks in my brain that are indelible.
All that has some bearing on why I use puts so much nowadays.
I like your position though, getting 6 bits to be willing to take NE at 34 in 9 weeks is a good,
safe bet. A decent annualized return on your cash and an possible good entry point.
I've been selling quite a few of the 10/19 $36 puts, repeating a trade I've done many times this year.
All that's different is the political background, which has the premiums higher than they would usually be this close to expiry and 5% off the strike. And rightly so, as there are political risks.
I think the politicians probably find some kind of last minute way to save face and kick the can down the road.
They are up yet another 5% today, on big volume (for that small stock anyway). And on a wretched day for the market.
They are a bite-sized outfit with all modern gear, not a terrific bargain at today's multiples, but much more so on a longer view. Watching whats happening to them pertains here, IMO, as the deeper portion of the split NE will be somewhat more similar to PACD, a purer deep water play with newer gear.
I've been in and out of the name, but got it called away into this current run-up. I made a nice little profit, but it could have been a nice big one. Oh well.
I have used SDRL in only one way. Put selling. It has legions of fans, who are apparently dazzled the dividends. For that reason, when it dips, you can always bank on a rebound. I sell puts into the dips.
I don't think I've ever held the stock, but the options have done well for me. The stock itself is too highly levered, and to linked to Brazil, for my taste.
I mention them because ADP posited that they might try to swallow the high-spec portion (an opinion on which I can't really intelligently comment) and to cite them as a relatively "high spec" fleet that gets some love from the market, in terms of it's multiples.
ESV paid fairly dearly for the better bits of PDE that emerged from the Pride spin-off, something like 20x that years earnings. I don't recall how the math worked out for shareholders holding both the high and low ends, but the high end became an attractive bolt-on that got a premium price.
The possible parallels between Pride and Noble are there to be seen. Interesting that the market has taken a kind of "meh" attitude after the initial bounce.
I note that the market has been raining favor on the companies with the highest spec fleets lately, SDRL and PACD have both outperformed by quite a bit recently. I held some PACD, but sold it into this run-up, too soon, of course.
The market likes it after hours. On pretty good volume too., 163k shares.
This is a mild surprise to me, as I thought this was fully anticipated.
Back we go to the high side of the little range we've been stuck in. Better high than low.