RIG Blog Sept 8, 2014 by Bushy

Hello people,

My first blog here at ketchumandfleezem.com…

Someone came across RIG on the forum, which I am proud to be part (Stock Vision (http://www.garsworld.com/) – a stock/stock options trading technical tools/signals and services website, providing no delay live feed updates and multiple time frame charts, weekly down to 5 minutes) who wanted to trade it and the publisher of this website (KetchumFleezem.com) has been asking me to put a blog together on options.

 

RIG Sept 8 2014 Chart

Chart Courtesy stockcharts.com

 

My analysis for trading options on RIG is as follows:

Primarily, I use Pivot Points and Fibonacci Retracements, rarely do I rely on indicators, as I feel them to be lagging, whether they are or not, and on the verge of reversal at whim.  I find option open interest/option volume (call/put) a more reliable reflection of true market direction/trend, using Bollinger Bands and RSI for Trend/Momentum, respectively (but prefer the Ultimate Oscillator to the RSI).

 

RIG Pivot Points

 

Pivot Points             Daily            Weekly

Resistance 3:          $38.20         40.05

Resistance 2:          $37.98         39.46

Resistance 1:          $37.79         38.53

Pivot Point:            $37.57         37.94

Support 1:              $37.38         37.01

Support 2:              $37.16         36.42

Support 3:              $36.97         35.49

 

My favorite tools for trading options are Options Analysis (optionsanalysis.com), Fidelity, Covered Calls website (coveredcalls.com) and trained on options using TOS (Think or Swim, which also has some great scans for both stocks and stock options; those being Sizzle stocks for Stocks and Spread Hacker for options).  I will sometimes look review technical analysis signals on the Trade King website; excellent website technical analysis provided by Recognia, for Option Strategies a Scanner is provided by IVolatility, which I’ll openly admit, I like, but am not in love with).  For Earnings and Dividends, I use Zacks (Zacks.com), Fidelity (above), Earnings Whispers (EarningsWhispers.com) and Option Slam (OptionSlam.com), to get a feel for what has happened in past coinciding quarterly cycles and what may unfold into those events.

RIG closed (Friday, September 5th, 2014) on a doji, at 37.60, forming a possible bull flag with its RSI at 35.25 and a bit of a possible downtrend, breaking the lower Bollinger Band.  Seeing heavy Oct straddle volume at 38, selling Oct 40 calls while buying 39 calls, which could signal debit call spreads.  RIG prices are below both the 50 and 200 DMA.

Volatility was through the roof into earnings, as expected, on positive numbers, beating by 0.52.  August 4, 2014, one day prior to earnings, RIG ranged between 38.12 – 39.44.  Earnings day into next day ranged between 38.13 – 39.39.

RIG rose as high as 39.59 on 8/11 then formed a doji at 39.76, one day prior to its dividends date of 8/20, which is normal and expected for the event; dropping prices for 4 days, bottoming at 37.33 on 8/25, then bouncing.

I don’t like that RIG Ultimate Oscillator is pointing down, but technically speaking, it has been seeing mostly inside days for about two weeks.  Darvas Box like formation.  I really don’t see it going up much, as the doji formation is a sign of indecision, as I’m facing, but may indicate a reversal to the upside, despite its weakness.  Evidently someone has interest in the 39 calls, as 7500 contracts traded at 1:13 pm on Friday.  RIG expected dividend of 0.75 cents on 11/20 and has paid its highest dividends to date since February/March 2012.

My trade of choice would be on Sept 26 calls broken wing butterfly , buy 1 39.50 – sell 2 43 – buy 1 47 at 0.13 cents, potential gain/loss $350/($50) – with high probability of being outside the strikes and about 27% being in the strikes zone.

Two other choices with better profit and slightly higher risk:

Nov 2014 butterfly using in-the-money (ITM) 36 calls, buy 1 36- sell 2 43 – buy 1 50 at 2.31 debit, potential gain/loss $469/($231).

Or, Oct 2014 butterfly using in-the-money (ITM) 37 calls, buy 1 37 – sell 2 41 – buy 1 45 at 1.19 debit, potential gain/loss $281/($119).

Don’t make your entries till you see what Monday’s market open looks like, as things are heating up in the Middle East and things may get ugly out there.  Always look to enter at the mid price when/where possible.

Economic Calendar for the week of September 8, 2014 (Courtesy of Briefing.com):

 

Week of September 08 – September 12 Summary
Date ET Release For Briefing.com Forecast Briefing.com Consensus Prior
8-Sep 15:00 Consumer Credit Jul $17.0B $17.8B $17.3B
9-Sep 10:00 JOLTS – Job Openings Jul NA NA 4.671M
10-Sep 7:00 MBA Mortgage Index 6-Sep NA NA 0.20%
10-Sep 10:00 Wholesale Inventories Jul 0.40% 0.50% 0.30%
10-Sep 10:30 Crude Inventories 6-Sep NA NA -0.905M
Week of September 08 – September 12 Detailed
Date ET Release For Briefing.com Forecast Briefing.com Consensus Prior
8-Sep 15:00 Consumer Credit Jul $17.0B $17.8B $17.3B
9-Sep 10:00 JOLTS – Job Openings Jul NA NA 4.671M
10-Sep 7:00 MBA Mortgage Index 6-Sep NA NA 0.20%
10-Sep 10:00 Wholesale Inventories Jul 0.40% 0.50% 0.30%
10-Sep 10:30 Crude Inventories 6-Sep NA NA -0.905M
11-Sep 8:30 Initial Claims 6-Sep 310K 300K 302K
11-Sep 8:30 Continuing Claims 30-Aug 2500K 2495K 2464K
11-Sep 10:30 Natural Gas Inventories 6-Sep NA NA 79 bcf
11-Sep 14:00 Treasury Budget Aug NA NA -$147.9B
12-Sep 8:30 Retail Sales Aug 0.30% 0.60% 0.00%
12-Sep 8:30 Retail Sales ex-auto Aug 0.30% 0.30% 0.10%
12-Sep 8:30 Export Prices ex-ag. Aug NA NA 0.30%
12-Sep 8:30 Import Prices ex-oil Aug NA NA 0.00%
12-Sep 9:55 Mich Sentiment Sep 83.5 83.5 82.5
12-Sep 10:00 Business Inventories Jul 0.30% 0.40% 0.40%

 

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