Investors in Transocean Ltd (RIG) saw new options trading for the May 22 expiration begin today. A notable put contract at the $6.00 strike price has a current bid of 18 cents, allowing investors to commit to purchasing shares at this price while potentially lowering their effective cost to $5.82. This represents a 12% discount from RIG’s current trading price of $6.82, with a 71% likelihood of the put expiring worthless, which would provide a 3.00% return on cash commitment, or 21.90% annualized.
On the call side, a contract at the $7.00 strike price, with a bid of 39 cents, would allow investors to sell shares at this price if held. If RIG shares are called away by expiration, this would yield an 8.36% return. This call option has a 39% chance of expiring worthless, potentially allowing investors to keep both their shares and the premium, representing a 5.72% additional return or 41.74% annualized. The implied volatility is 183% for puts and 158% for calls, while actual trailing volatility stands at 63%.
