Trade Plan [Noble] [15-Aug-2017]

Trade Pattern

Momentum

Trade Alpha

  • Real money convertible bond holders are short Noble shares
  • Convertible bond holders dictate how low the stock price goes
  • Once convertible bond hedges are set
    • Less ongoing selling, likely higher stock volatility
    • Any positive credit news could trigger short covering
  • Convertible bonds in existence > equity value of Noble
  • Play this effect with stop-limit orders, trend following

Absolute Worst Case Scenario And Worst Case Loss

Worst case scenario is Noble bankruptcy and loss of entire value of position.

Fair Value Profit

Likely to make at least 15c per share on a price run.

Tail Risks to Upside and Downside

Downside: Noble announces bankruptcy, shares in trading halt, value goes to zero.
Upside: bidder comes in to buy some of Noble’s assets, stock price leaps 100%+

Contingent Action Plan

Buy using buy-stop order if price touches previous day’s high. Hold while closing price is increasing each day.

Key Dates To Watch

20 October 2017 – Noble Americas Corp $2b borrowing base facility expires
Q3 2017 – bidders expected for sale of Global Oil Liquids

Review

TODO: Review of all aspects of the trade.

One thought on “Trade Plan [Noble] [15-Aug-2017]

  1. Pingback: Bought 50k NOBL.SI @ 0.4375 | Know Your Alpha

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