Call buyer targets Rowan at lows

optionMONSTER

Rowan is near two-year lows, but one trader is looking for a bounce in the next two months.

About 2,300 July 31 calls were bought mostly for $0.80 on Friday, according to optionMONSTER's Heat Seeker tracking system. Volume was well above the strike's previous open interest of 1,339 contracts, indicating that new positions were established.

These long calls lock in the price where the stock can be purchased through mid-June no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $31. (See our Education section)

RDC was up a penny to $30.12 on Friday, a session after closing below $30 for the first time since June 2012. The offshore oil and natural-gas driller reached a 52-week high of $38.65 last September but has been trending lower since then.

The company beat first-quarter earnings and revenue expectations on May 6, but those results had little effect on the stock price. Rowan's next quarterly report is scheduled for Aug. 6.

Friday's total option volume in RDC was more than triple its daily average for the last month. Overall calls outnumbered puts by 23 to 1, a reflection of the session's bullish sentiment.


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