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Option Brief: DryShips Inc. (NASDAQ:DRYS) options traded at nearly double the average daily rate yesterday, amid news that Ocean Rig UDW Inc (NASDAQ:ORIG) -- of which DRYS owns a majority stake -- successfully took delivery of its newbuilding drillship, the Ocean Rig Skyros, last Friday. By the market's close, approximately 28,000 contracts had crossed the tape, 23,000 of which did so on the call side.
At the forefront of yesterday's action was the January 2014 4-strike call. The majority of the 5,979 contracts traded here went off at the ask price, and open interest at the strike jumped overnight, making it safe to assume fresh bullish bets were opened here. Since the stock is currently trading at $4.11, this option is now in the money; however, in order for yesterday's call buyers to profit, the equity has to run north of breakeven at $4.20 (strike price plus the volume-weighted average price of $0.20). The last time the shares hit this mark was in July 2011.
Since the aforementioned news hit the Street yesterday morning, DryShips Inc. (NASDAQ:DRYS) has tacked on more than 10%, tagging a two-year high of $4.16 out of the gate today. Needless to say, options traders are again flocking to DRYS' options pits today, with total volume running at about three times the typical intraday norm.