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RIG Rakes in Options Amid Volatile Week

Laura McCandless

Oil and gas drilling company Transocean Ltd (NYSE:RIG) is taking a steep fall on the charts today -- alongside much of the energy sector -- pulling back after the Organization for Petroleum and Energy Countries' (OPEC) production cut announcement caused a Monday surge. RIG is down 13.3% to trade at $2.48 at last check, heading toward five-straight days of double-digit price moves, and in response to the volatile week, options traders are flocking.

So far today, 59,000 calls and 55,000 puts have crossed the tape -- call volume that is three times the average intraday volume, with puts running at seven times what's typically seen. Most popular is the June 2 put, followed closely by the June 3 call, with new positions being opened at the former. The June 3 call is also in the top 10 open interest positions.

RIG June 10

 

On the charts, RIG's Monday rally was capped by its 200-day moving average, and the stock has since fallen back to the $2 level. The shares are still up around 80% in the last three-month period, but prior to the last five days have traded within a tight range between the $1 and $1.75 level. It's worth noting that RIG sports a 14-day Relative Strength Index (RSI) of 67 -- on the cusp of "overbought" territory, suggesting this two-day breather might have been in the cards.

The penchant for puts is quite a change from the last 10 days, where 32,101 calls have been bought at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to 7,510 puts.