Transocean Ltd. (RIG) Put Spread Trader is Back Again

Transocean Ltd. (RIG) is a Swiss based company engaged primarily in the area of offshore oil and natural gas drilling and exploration. At the time of this post (11:55AM CST), RIG is currently trading at 15.98, up 0.19% on the day. The stock is currently sitting just above the 52 week lows of 14.50, as multiple attempts to break higher over 20.00 level resistance on the daily chart have failed over the last few months. The stock has remained in a steep decline over the course of the past year in a highly correlated move along with the continuing downward slide in the price of crude oil. RIG is set to report earnings today, 2/25/2015 after the market close.

Yesterday at approximately 11:45AM CST, OptionHacker detected and flagged some unusually bearish options activity in RIG, as a large trader stepped in and bought 13,981 of the RIG Apr ’15 15.0-11.0 strike put spreads for a net debit of 1.00 per one lot of this spread. With an initial cash outlay of approximately $1,398,100 before commission costs, this large trader is looking to profit from a continued move new lows in RIG below 14.00 after earnings and as we progress into the April monthly options expiration about 50 trading days away. As mentioned above, the technical setup in RIG is currently very bearish, as the stock remains below the continually downward sloping Ichimoku Cloud and all relevant moving averages on the daily chart. This bearish setup in conjunction with yesterday’s heavy put spread buying in RIG has me leaning very bearish this name going into tonight’s earnings announcement, and I will be looking to establish a short position in this name before the close of trading today.

Trade: Trader bought 13,981 RIG Apr 15-11 Puts for $1.00
Risk: $100 per 1 lot
Reward: $300 per 1 lot
Breakeven: $14.00

I like this order and have made money trading RIG put spreads on UOA in the past so I put on this same position for $0.98.