Noble Energy, Inc. (NBL) is an oil and gas exploration and production company with operations around the world. The company’s stock is currently trading around $50.70 in a 52 week range of $41.01-$79.63. The stock has rallied nearly 7% this year and is now trading in relatively bullish territory on the Ichimoku Cloud. NBL is set to report earnings before the open tomorrow and a flurry of bullish unusual options activity ahead of the report may be signaling a move higher in the stock.

Earlier in the session a trader bought 1,995 NBL Jun 52.5 Calls for $1.40 and another 1,528 NBL May 50 calls for $1.50. NBL has now traded nearly 15x its average daily options volume NBL is rallying on the day and it seems like options traders are looking for a move higher on earnings.

NBL has rallied 4 times and sold off 4 times on earnings day over the past 8 quarters. On average the stock moves around 2.1% on earnings day. With the options market currently implying a move of $2.30 by expiration we can calculate an upside target of around $53.00 by May expiration. With the relatively bullish chart and bullish orderflow into earnings it seems like NBL is setting up well to the long side.

Trade: Selling the NBL May 52.5-50 put Spreads for $1.45
Risk: $105 per 1 lot
Reward: $145 per 1 lot
Breakeven: $51.05


Andrew Keene


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