Weatherford International’s stock options volume jumped off of the chart yesterday. Call option and put option volume was inordinately high for Weatherford. There didn’t appear to be any significantly related news for Weatherford yesterday. They announced that their next earnings report is scheduled for January 26, 2010, but such a far off event shouldn’t create a spike in stock options volume.
Weatherford provides equipment and services for the oil and natural gas industry. Weatherford’s largest direct competitors are: Baker Hughes (BHI), Halliburton (HAL) and Schlumberger (SLB).
Weatherford’s stock price is up over 100% from is low in December of 2008, but well off of it’s two-year high in the $50 range.
Weatherford’s stock price is currently in the range of previous support, just under the $18 price point.
Weatherford’s Strike of Pain for November, December and January is $20 which is above the current stock price, which is bullish. The Strike of Pain represents the strike where the stock options buyers will lose the most money and the stock options sellers will gain the most money at expiration.
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With the economic recovery underway, oil demand will increase as will the price of oil, as will the demand for Weatherford’s products and services. Weatherford is looking bullish and a covered call investing position for Weatherford for November looks interesting with a potential return of 4.8% and a time frame for realizing the potential profit of just 22 days. The call option of interest to sell for the covered call position would be the November 17.5 with ticker symbol WFTKR.
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To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares for their trading portfolio and sell one call option for each 100 shares of stock purchased for their personal stock portfolio.
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[tags] oil, natural gas, Strike of Pain, BHI, Baker Hughes Inc., HAL, Halliburton Co., SLB, Schlumberger Ltd. [/tags]