Bears Hedge Their Bets on Diana Shipping Inc.

Calls are gaining popularity on Diana Shipping Inc. (DSX), according to data from the International Securities Exchange (ISE). During the previous five sessions, traders on the ISE have bought to open 2,005 calls on DSX, compared to just 24 puts. In other words, 83.54 times more calls than puts have been purchased within the past week.

Meanwhile, the stock's 10-day ISE call/put volume ratio stands at a lofty 29.61, as nearly 30 times more bullish bets than bearish have been bought to open during the past two weeks. This ratio ranks higher than 97% of comparable readings taken over the previous year, indicating that speculators have rarely picked up calls over puts at a faster pace.

However, this apparently upbeat option volume should be taken with a grain of salt, since short interest on DSX has also been racing higher lately. The number of shares sold short ballooned by 27.7% during the past month, swelling by 29.3% during just the most recent reporting period. These conflicting data points suggest that some of the recent call purchases might have been snapped up as hedges by bearish bettors.

Meanwhile, on the charts, DSX is poised to finish the session below its 10-week and 20-week moving averages, snapping a three-week winning streak above them. Now, these trendlines could resume their former role as resistance, potentially pressuring the shares lower.

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