By Pete Najarian, co-founder of OptionMonster
NEW YORK -- Noble (NE) has performed well and Thursday option traders were targeting the offshore-drilling contractor.
OptionMonster's monitoring systems detected heavy call volume in the name, with 49,000 trading against fewer than 2,400 puts. Calls lock in the price where investors can buy shares, so they can generate significant leverage in the event of a rally.
One big transaction was in the February 40 and 42 contracts. A trader bought the 40s for $1.13 and sold the 42s for 47 cents, resulting in a net cost of 66 cents. If Noble's shares go to $42 on expiration, the trader will collect the $2 spread -- a gain of 203% over cost.The stock closed at $39.61 Thursday, up 1.67%. Earlier in the week, the February 38 calls traded heavily for 91 cents and more than doubled by Thursday. The company will report earnings results on Jan. 23. Argus has cut its estimates, but that hasn't stopped buyers from piling into Noble. Najarian owns NE calls
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV