ATP Oil & Gas: 2012 Call Spread Plays

Kyle Felciano submits:

ATP Oil & Gas (ATPG) is an independent offshore driller with a main presence in the Gulf of Mexico and the North Sea. I am not here to make the case whether to be long or short as it has been discussed ad nauseaum elsewhere. The purpose here is simple: if you have done all of your due diligence and are long, I am going to show you some of the potential optimal returns by creating January 2012 call spreads.

As of market close on Wednesday, the stock closed at $14.76. Historical volatility is 72.8% according to TD Ameritrade, which creates huge option premiums. The delta of the $12.50s is .73, meaning for every dollar move of the stock it will rise .73. The $22.50s have a delta of .37, so in essence despite being well out of the money they are moving as well. ATP longs have the belief that th

By admin posted about 1 year ago

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