Investors in Transocean Ltd (RIG) are now able to trade new options expiring on July 2nd, including a notable call contract with a $7.50 strike price, currently bid at 10 cents. As of today, RIG shares are trading at $7.19. If investors execute a “covered call,” they are essentially agreeing to sell their shares at $7.50, which would yield a total return of 5.70%—excluding dividends—if the stock is called away at expiration.
The $7.50 strike represents about a 4% premium over RIG’s current trading price. Investors face a 43% probability that the option will expire worthless, allowing them to retain both the premium and their shares. In such a scenario, the premium would provide an additional return of 1.39%, or 12.09% annualized. The implied volatility for this call contract is 149%, compared to an actual trailing twelve-month volatility of 55%.
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