11/24/2023 0 Comments Dril quip stock21 and expire on Dec 22.Īssuming you would enter this covered call trade at the closing prices on Monday, at expiry, the maximum return would be $2.08 (i.e., ($7 – ($49.92-$45))*100), excluding trading commissions and costs.Īn ITM covered call’s maximum profit is equal to the extrinsic value of the short call option. This call option would stop trading on Dec. The $45 option is slightly ITM, offering more downside protection in case of increased volatility in DRQ stock, especially around the earnings call. Use an in-the-money covered call covered call, whereby you would buy 100 shares of Dril-Quip stock at a limit price of $49.92 and, at the same time, sell a DRQ 21 Dec $45 call option, which currently trades at $7. If you believe that DRQ is likely to stay within a range with a slight possibility of a breakout to the upside, here are the two trades set up for DRQ stock (prices are based on Dril-Quip stock’s closing price of $49.92 on Oct. Short-term support for DRQ is first at $48.70 and then at $47.30 meanwhile, short-term resistance in Dril-Quip stock is first at $50.60 and then at $53. Dril-Quip’s technical chart is still exhibiting range-bound price moves. DRQ stock’s 52-week price range has been $37.35 (Oct. DRQ stock’s relatively small-cap of $2 billion and strong financial position have also increased the rumors that it may be an acquisition candidate by a larger energy firm.Īs October investing is already seeing sector rotation, a bullish offshore narrative is likely to support Dril-Quip and prevent a decline in share price amidst a potential broad market sell-off. Its earnings are expected to grow at about 20% yearly, a significant number for the industry. Analysts highly rate the strong operational performance of management, the cash-rich and debt-free position of the company, and the technological leadership of Dril-Quip. However, as oil prices continue to improve, the business environment is beginning to look brighter for the industry.Ģ018 Q2 saw DRQ come up with robust quarterly results and year-to-date (YTD), the stock is up over 4.5%. Like its competitors, Dril-Quip has suffered from falling oil prices as well as the downturn in offshore drilling equipment and services. Several of its competitors include Baker Hughes (NYSE: BHGE), National Oilwell Varco (NYSE: NOV) and Superior Energy Services (NYSE: SPN). Houston-based DRQ - which operates in the oilfield equipment and services (OFS) industry - designs, manufactures, sells and services equipment for offshore drilling. Specifically, there are two plays with a slightly bullish bias in DRQ stock that I want to share with you, as each play could lead to impressive profits. Dril-Quip (NYSE: DRQ) has been range-bound for the past several months and I expect the trend to continue with a bias to the upside going into the earnings call on Oct.
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