How the bulls are playing Nabors


Nabors Industries has pulled back, and the bulls are stepping in.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 1,200 March 17 calls for $0.99 and the sale of an equal number of March 17 puts for $1.41. That translates into a credit of $0.42.

Owning calls locks in a price where shares can be purchased in the energy-drilling company, while selling puts generates income but compels the investor to buy the stock if it falls to a certain level. Combining the two strategies is highly bullish, resulting in a position that's similar to owning stock. (See our Education section)

NBR fell 1.30 percent to $16.65 on Wednesday and has been slowly working its way higher all year. The shares are now back to their $16.50 consolidation area from September, which could make some chart watchers expect a rebound. The stock is also near its 100-day moving average.

Overall option volume in the name was twice its daily average, with that bullish transaction accounting for more than half the total.

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