Barclay Bank Advises Investors on Oil Spill

By Jeff Kearns

May 14 (Bloomberg) -- Investors should sell bearish Transocean Ltd. options and buy BP Plc’s to take advantage of a price anomaly after the gulf oil spill, Barclays Plc said.

Options strategist Maneesh Deshpande, who leads the top- ranked derivatives strategy team in Institutional Investor magazine’s 2009 survey, recommended selling Transocean’s January $45 puts and buying January $40 puts linked to American depositary receipts of BP, Europe’s largest oil company. Puts give the right to sell a stock.

“The options market seems to be pricing in a higher downside risk,” for Transocean because the premium for its puts is high compared with calls while BP’s put premium is “cheap,” New York-based Deshpande wrote. “We recommend this trade to investors looking to express a bearish view on the impact of the accident.”

Transocean, based in Vernier, Switzerland, is the owner and operator of the Deepwater Horizon drilling rig leased to BP that exploded and sank last month in the Gulf of Mexico, causing the largest spill in 40 years from an offshore U.S. rig or platform. Oil has been gushing from the underwater well at a rate of 5,000 barrels a day, according to a U.S. Coast Guard estimate.

Transocean has tumbled 28 percent to $66.32 from the April 20 disaster through today, while London-based BP’s U.S. shares have lost 23 percent to $46.87. Energy companies in the Standard & Poor’s 500 Index are down 7.3 percent during the same period.

Transocean has asked a U.S. federal court to limit its liability for the accident to $26.7 million. More than 100 lawsuits have been filed against it, the company said in a statement today.

To contact the reporter on this story: Jeff Kearns in New York atjkearns3@bloomberg.net.