Is there short sale profits in oil rigs? If you’re looking to making money through short sales, you might want to consider Transocean Ltd (NYSE:RIG) Transocean is an oil rig maker. Just like any oil-related stock, it’s been having a tough time lately. Thanks to over 50% decline in the global price of crude, oil extractors, oil distributors, and oil-related services are seeing their stock prices plummet. Recently, Transocean stock has traded around $16 to $17. This is a far cry from its 52-week high of $46.12. Its 52-week bottom, however, is $14.50.
Does this mean that this stock has hit bottom? Not according to people shorting the stock. In recent weeks, the short interest in Transocean has risen by 8%. This means 110.59M shares of Transocean stock have been sold short. That’s a whopping 31.7% of the company’s share flow. If this all sounds worrisome for the stock, it’s because the short interest in Transocean has been growing for the past nine periods. It hasn’t been a straight drop, however. It is kind of risky to short a stock now because it does spike up from time to time. Recently, it fell over to 17% of a two-week period but then proceeded to reclaim 11% of its value.
It’s probably a better strategy to wait for the stock to spike even higher and then short it at that point. Regardless, the mounting level of oil inventories as well as continued signs of global economic weakness and softening oil demand point to lower oil prices at least for the mid-term.