Unusual Options Activity
American International Group (AIG)- A likely rollout from 42,985 Jan 2016 $60 calls ($1.80 credit) into 42,985 Jan 2017 $60 calls ($4.50 debit). Call activity was over 7x the average daily volume. The insurer trades at a P/E ratio of 11.26x (2015 estimates), price to sales ratio of 1.19x, and a price to book ratio of 0.71x.
ARM Holdings (ARMH)- Over 2,000 May $55 calls were bought for $0.58-$1.10. The Apr $55 calls also saw sizable buying. Call activity was nearly 6x the average daily volume. Goldman Sachs reiterated their conviction buy rating on March 31st.
Diamond Offshore Drilling (DO)- A rollout from 6,300 Apr $30 puts ($1.39 credit) into 6,300 May $22.50/$27.50 put spreads ($1.09 debit). Earnings are due out on May 4th.
Gilead Sciences (GILD)- 10,000 May 15 $105 calls were purchased for $1.69-$1.79, against open interest of 23,926 … Read More »
Traders Bet On More Downside In The Oil Drillers
Notes: Long before the oil bear market began in the second half of 2014, Diamond Offshore Drilling (DO) had been struggling (see 2-year weekly chart above). The collapse in energy prices as you might have guessed hasn’t helped the $4B oil & gas driller headquartered in Texas. Earnings estimates for 2015 and 2016 continue to be slashed week after week ($3.12 per share to $2.13 per share for 2015 in just 3 months). This means shares trade at a not so cheap 14.18x (even higher when look at 2016 earnings under $1), price to sales ratio of 1.52x, and a price to book ratio of 0.93x. Revenue of almost $3B in 2014 is expected to shrink 8-9% annually for the next couple of years too on lower activity … Read More »