[Opening Straddle on Transocean Inc (RIG)]
Dear Member:
I like a Nov 90 straddle on Transocean Inc.(RIG) to purchase simultaneously the Nov 90 calls (RIGKR) and the Nov 90 puts (RIGWR) at a debit limit of $14.70. This play is primarily a volatility play since implied volatility is now only in the 2d percentile. If volatility returns to the 50th percentile fairly rapidly, the price of both the puts and the calls could BOTH go up thus the play can be profitable with either a strong move in volatility and/or a fairly strong price move in EITHER direction. The maximum risk would arise at expiration if the stock closed at precisely $90. Generally, I would not expect to stay in this play more than half way to expiration or around 3 months from now.
DISCLOSURE: At the time of publication, I have no position in Transocean Inc (RIG) or any of its options.
Sincerely,
Bill Kraft
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