Trade Alert: Puts on a new name and taking profits elsewhere

Time to lock in some more profits on our Netflix and Amazon call options that we’d bought right near the bottom back a month ago today (See Trade Alert: Panicky action, buying call options and Trade Alert: More NFLX and AMZN options).

I didn’t catch the exact bottom in those stocks for the buy and I’m not catching the exact top here with another round of trimming those call options today. But I’m going to sell the remaining call options that I have in NFLX and AMZN, locking in some outsized gains. I’ll still have some small common stock position in both that I’m holding steady for now.

Being patient and opportunistic has been a very good strategy so far this year, as both the bears and the bulls have been mostly slaughtered by the wild swings in the market we’ve seen. Let’s be ready to pounce the next time we have a terrific pitch like we did this time with these call options.

Presently, I’m looking at several potential new short ideas. One name that I’m starting to bet is headed lower is SeaDrill SDRL. I was asked about in the Trading With Cody Chat Room yesterday was SeaDrill to which I replied: “Hmm, that SeaDrill $SDRL looks fishy and probably is a good short candidate. Thanks for flagging it, I’ll dig deeper, puns intended.”

This Norwegian oil rig drilling company has more than $10 billion in debt, is based in Bermuda and got a big pop because the CEO is saying that he might be able to save the company’s shareholders after all. Or something like that, here read this:

“We have been working for some months with a refinancing plan. We have run it by our board as we said during our (fourth-quarter-results conference) call. Now, people are realizing that we have started. Those who have shorted the share are beginning to panic and see that the shareholders may succeed,” CEO Per Wulf said.

This oil rig driller looks like it’s in big trouble to me and though it’s already down 15% from yesterday’s highs, it’s still up 300% from its lows of just a month ago:

You can’t find enough shares to borrow to short this stock but there are some options for the name. I’m putting some bids out there for some in-the-money SDRL put options, with strikes at $6 and $7 and with expiration dates out to July 2016 and October 2016. I’m bidding about 10-20 cents above the current bid in the wide bid/ask spreads for these puts and will hopefully get filled on some of these orders without over paying for them.

I’ll be sending out an updated Latest Positions with reviews and new ratings in a bit so stay tuned for that.