Transocean Ltd. (RIG) Bulls Come Out of Hiding

Transocean LTD (NYSE:RIG) is seeing a rare dose of bullish attention today

May 15, 2015 at 1:42 PM
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Despite the fall in crude prices, Transocean LTD (NYSE:RIG) has added 1.3% today to trade at $21.07, after seeing its price target lifted to $15 from $13 at Clarkson Capital. Aside from yesterday's dip, the shares have been solid since hitting an almost 20-year low of $13.28 on March 16, tacking on nearly 59%. Elsewhere, activity has picked up in the stock's options pits, with calls and puts both crossing at an accelerated clip.

RIG's most popular option by far is the June 14 put, and it looks as though it's seeing sell-to-open activity. These traders expect the equity to hold above $14 through the close on Friday, June 19, when the contracts expire. Data suggests other traders are buying to open the weekly 5/22 21-strike call, betting on extended gains above $21 before the contracts expire at next Friday's close.

It's strange to see traders take an optimistic approach to RIG, considering the bearish stance of so many traders and analysts. For example, the security's Schaeffer's put/call open interest ratio (SOIR) registers at 3.77 and ranks in the 94th percentile of its annual range. This means put open interest almost quadruples call open interest among options expiring in three months or less. Plus, with the ratio being only 6 percentage points from an annual high, option traders have been way more put-focused than normal.

That's not all, though. None of the 16 analysts covering RIG say it's a "buy," and short interest represents almost 30% of the stock's float. Going by Transocean LTD's (NYSE:RIG) normal trading pace, it would take bears close to nine sessions to buy back these shares.

 

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