Stocks quoted in this article:
Option Brief: Put players were out in force on DryShips Inc. (NASDAQ:DRYS) yesterday, with the contracts trading at three times the average daily pace. Of the roughly 12,000 puts that crossed the tape, 5,379 switched hands at the January 2014 4 strike. Nearly three-quarters of these contracts changed hands on the ask side, and open interest rose overnight, suggesting a new batch of bearish bets was initiated.
The options market doesn't seem too confident this put will be in the money at the close on Friday, Jan. 17, as delta for the option is currently docked at negative 0.30, or 30%. Should the stock fail to drop the 7.2% needed to breach the strike price, the most the speculators stand to lose is the initial premium paid. According to Trade-Alert, the volume-weighted average price for the puts was $0.15 apiece.
This bearish bias toward a stock that's rallied roughly 149% over the past year is a bit surprising. What's more, DryShips Inc. (NASDAQ:DRYS) tagged the $5.00 mark on Dec. 27 -- its loftiest perch since April 2011. After touching this technical milestone, the equity consolidated some of these gains, but appears to have found a foothold atop its 10-day moving average -- a trendline that previously served as support in mid-December. All things considered, it's possible some of the out-of-the-money puts were picked up for downside protection. At last check, DRYS was lingering near $4.31.