Wednesday, April 20, 2011

Diamond Offshore Drilling, Inc. (DO)

Diamond Offshore will announce Q1 2011 earnings tomorrow morning before the opening bell, so let's take another quick look at how the stock has traded since 2004. 

1. LONG the week of 1.5.04 at $16.21. Using $13.67 as a stop the initial risk (R) on the trade was $2.54. Stopped out and reversed to short at $52.27 the week of 7.17.06. The percentage gain on the trade was 222.5%, and the reward-to-risk ratio was $36.06/$2.54 = 14.18.



2. SHORT the week of 7.17.06 at $52.27. With my stop set at $69.22 the R was $16.95. Stopped out and reversed to long the week of 12.11.06 at $63.59. The percentage loss on the trade was -21.7%, and the reward-to-risk ratio was -$11.32/$16.95 = -0.67. 

3. LONG the week of 12.11.06 at $63.59. The stop was $50.79, so R = $12.80. Stopped out and reversed to short at $89.39 the week of 9.2.08. The percentage gain on the trade was 40.6%, and the reward-to-risk ratio was $25.80/$12.80 = 2.02.

4. SHORT the week of 9.2.08 at $89.39. My stop was $114.14, so the R was $24.75. Stopped out and reversed to long at $72.30 the week of 5.4.09. The percentage gain on the trade was 19.1%, and the reward-to-risk ratio was $17.09/$24.75 = 0.69.

5. LONG the week of 5.4.09 at $72.30. The stop was $51.34, so R = $20.96. Stopped out and reversed to short the week of 3.15.10 at $81.75. The percentage gain on the trade was 13.1%, and the reward-to-risk ratio was $9.45/$20.96 = 0.45.
 
6. SHORT the week of 3.15.10 at $81.75. With my $97.85 stop the R on the trade was $16.10. Stopped out and reversed to long at $70.57 the week of 1.3.11. The percentage gain on the trade was 13.7%, and the reward-to-risk ratio was $11.18/$16.10 = 0.69.

7. LONG the week of 1.3.11 at $70.57.  Using $57.65 for the intitial stop, my R = $12.92. Closed last week at $74.99 with a stop at $65.32. The percentage gain on this trade is 12.9%, and the reward-to-risk ratio is $4.42/$12.92 = 0.34.

Scorecard:
Winning Trades: 6 | 85.7% | $17.33/share avg.
Losing Trades: 1 | 13.3% | -$11.32/share
Average Trade: Gain of 41.9% | $13.24/share | Reward-to-Risk Ratio (R): 2.53 

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