What Does Unusual Options Activity in Noble Energy, Inc. (NBL) Tell Us?

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

Regards,

Regards,
Andrew Keene
President/Founder
KeeneOnTheMarket.com

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