Options Traders Eye New Lows for Sinking Transocean Stock

Transocean is a victim of the sector-wide pain hitting energy stocks

Jun 21, 2017 at 3:14 PM
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The entire energy sector has been under pressure in recent weeks, with oil prices falling into bear-market territory. One casualty is offshoring drilling stock Transocean LTD (NYSE:RIG). Just today, RIG stock is down 6.4% at $7.67 --  an annual low that matches its low from February 2016.

This is nothing new for Transocean, though, as the shares have now shed almost half their value year-to-date. More losses could be coming next week, too, as RIG tops our list of stocks that could be negatively affected by end-of-quarter window dressing. In the meantime, options volume is accelerated on the offshore driller. 

transocean stock

Specifically, put and call volume are respectively running at three and two times their expected pace. The July 7.50 put is the most active overall, and it looks as if some options traders are buying to open the contract, betting on extended downside for RIG stock in the weeks ahead. On the call side, buy-to-open action has been detected at the weekly 6/23 8-strike call -- so some traders are betting on shares of Transocean bouncing back by Friday's close, when the weekly options expire. 

Coming into today, put options have been more popular overall among RIG options traders, with roughly 314,000 contracts in open interest, compared to 226,358 calls. However, not all of these put players are bearish. Over the past 10 weeks, more than 29,000 RIG puts have been sold to open, compared to just about 18,700 that have been bought to open.  

All the while, Transocean is in danger of bearish analyst attention. For example, the shares have an average 12-month price target of $12.35 -- representing a 61% premium to current levels. It wouldn't be surprising if analysts begin to lower their price targets on RIG stock

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