Dril-Quip has a 25-year history of successfully supplying equipment to the offshore drilling industry. Dril-Quip’s (DRQ) website touts its Mudline Suspension System introduced in 1982 and its Spar Wellhead System introduced in 1990.
Dril-Quip announced record third-quarter profits in early November and the company has a high level of insider ownership by its co-chief executive J. Mike Walker at 15% (many analysts feel ownership is an important component when rating a company). The company’s P/E for the last twelve months is currently an attractive 21.50 with and estimated forward P/E of 19.30.
Dril-Quip is noted for being a world-leading manufacturer of offshore drilling equipment for use in deepwater and harsh environments with oil and gas companies worldwide using its equipment for offshore drilling. Additionally, Dril-Quip earns profits from leasing and reconditioning its drilling products.
Dril-Quip is a company with a solid product, market share, and earnings, and the company has caught the attention of quite a few analysts with a current average analyst rating of 2.2.
Armed with this information and PowerOptions’ powerful Option Chain Tool, an attractive trade for a December covered calls stock options position can potentially be identified. Using the PowerOption Option Chain Tool to search for a covered call investment strategy opportunity couldn’t be any easier; the results are shown below:
| Covered Calls Dril-Quip (DRQ) $40.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DRQLH | 06 DEC 40.00 | $2.05 | 5.10% | 3.80% | 3.80% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DRQLV | 06 DEC 42.50 | $1.00 | 2.50% | 2.50% | 7.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The first trade, with the December $40 call option, is an attractive in-the-money [ITM] position as it combines reasonable downside protection of +5.1% with respectable potential profit of +3.8% (in only 25 days). The second trade involves an out-of-the-money [OTM] stock options position with greater potential return (+7.4%) but with less downside protection (+2.5%). OTM covered calls stock options positions require the price of the stock to appreciate in order to experience the maximum potential return as indicated by the %If Assigned column in the above chart.
PowerOptions provides a wide array of options searching tools making it easier for investors to identify attractive positions and best of all PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered calls stock option investment strategy.
PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a covered call investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing stock options positions.
PowerOptions’ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, iron condor and selling naked puts stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags]DRQ, Dril-Quip Inc., covered call investment strategy, investment strategy, iron condor, option income, poweroptions, selling naked puts, stock option trading, stock options[/tags]