Tempted by SLB – Schlumberger

Schlumberger Ltd Com (SLB) is tempting to jump in deeper with.  I sold a naked put ITM a few months ago and bought 100 shares when assigned to me at 65.  The day after expiration it started its current bull run. 

Since my trading model is all about cash flow from options, I didn’t hold on for the ride.  I sold covered calls at 67.50.  SLB is at 75 now and I think the chart shows that it could rally again soon.  The 50 day moving average is around 70 and that might not even come in to play if the 10 and 20 day averages around the current price of 75 can hold.  Adding in the trend lines I see that SLB is sitting on the line I drew starting in early March.  If that line fails, the line starting in the second week of 2007 is at 70.  Yes, 70 – the same as the 50 day moving average.  For icing on the cake, schaeffersresearch.com rates SLB 8 out of 10.  That’s rare these days to get such a high ranking from them.

My covered call expires in May.  I’m tempted to get back in if SLB comes back down to 70, but I don’t see that as likely.  If you don’t have a position in SLB yet, now is a good time to consider selling the June 75 naked puts or even a limit on the June 70 put in the hopes of a temporary price drop.  (See how I worked RVBD for the same method.)
Click on the thumbnail below for the chart: