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Traders have scooped up long puts on DryShips Inc. (NASDAQ:DRYS) with some rapidity in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the equity's 10-day put/call volume ratio of 0.23 on this trio of exchanges ranks in the 92nd percentile of its annual range, meaning puts have been bought to open relative to calls at a near-annual-high clip.
In yesterday's session, though, it was call players that took the lead. By the close, 9,602 calls were on the tape -- nearly three times the daily average, and seven times the number of puts exchanged. Amid the stock's 6.9% pop on Wednesday, in the wake of a newly inked drilling contract, both short- and long-term traders alike bet on an extended run for the shipping concern.
Two of the more active DRYS options were the weekly 6/6 3-strike call and September 3.50 call, where a collective 2,290 contracts changed hands. The majority of these went off at the ask price, and open interest rose overnight -- making it safe to assume that new positions were purchased.
With DRYS settling at $3.10 yesterday, the weekly 6/6 3-strike calls not only moved into the money, but toppled the at-expiration breakeven mark of $3.06, which is the strike plus the volume-weighted average price (VWAP) of $0.06. Gains are theoretically unlimited with each additional notch above here DRYS finishes at week's end.
Meanwhile, breakeven for the higher-strike calls at the close on Friday, Sept. 19 -- when the longer-term options expire -- is $3.65 (strike plus VWAP of $0.15). Risk for both sets of call buyers is limited to 100% of the premium paid, should the stock settle south of the strike prices at the respective expiration dates.
On the charts, it's been a rough year for DRYS, with the shares off 34%. More recently, the equity has been stuck churning between $2.90 and $3.10, although Wednesday's aforementioned jump brought DRYS to the top end of this range. In today's session, DryShips Inc. (NASDAQ:DRYS) is poised to extend yesterday's upward momentum, with the stock indicated about 1% higher ahead of the bell.