Schlumberger’s annual earnings increased $0.80 from 2010 and is expected to increase another $0.65 from 2011. Quarterly revenues have been stable and should is expected to be higher in the next two quarters, after beating estimates three out of the last five quarters.
My trade is to buy the stock at $72.47 and sell the SLB Nov 67.5 Calls for $5.80. I expect an 8% return from selling the call. My risk is the stock free-falling to zero and my reward is the price of the call, $5.80. My break-even point is $66.67, which is also my risk.