DO is breaking out

Diamond offshore drilling is breaking out. A bull put credit spread might be a good idea to play.

Note from briefing earlier:  08:35 DO Diamond Offshore: Credit Suisse Commentary (100.08 )

Credit Suisse research spent two days with Diamond Offshore’s (DO) management on a non-deal roadshow. Key takeaways: (1) Relative to expectations, the shallow and mid-water semi markets appear stronger than anticipated; (2) In spite of a significant expansion in floater rig capacity, DO believes demand for floaters will eclipse supply through 2010 if oil prices remain above $50/bbl; (3) While the U.S. GOM jackup market has stabilized, the company is not seeing any signs of near-term improvement, although they do expect for dayrates to strengthen in 2008.