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Option Brief: DryShips Inc. (NASDAQ:DRYS) shares haven't moved much today -- up slightly this afternoon at $3.21 -- but things are quite exciting in the equity's options pits. There, overall volume is running at twice the normal intraday pace, and call volume more than doubles put volume.
Most active is DRYS' December 4 call, which has seen over 2,500 contracts change hands so far. Nearly all of the transactions have taken place at the ask price, implied volatility is solidly higher, volume outstrips open interest, and data from the International Securities Exchange (ISE) confirms significant buy-to-open activity.
By purchasing the calls at a volume-weighted average price (VWAP) of $0.24, the traders are expecting DRYS to rally beyond $4.24 (strike plus VWAP) by the close on Friday, Dec. 19, when the contracts expire. This would put the stock in territory it hasn't explored since early March.
The DryShips Inc. (NASDAQ:DRYS) speculators will rack up additional profits with each step above breakeven the equity is sitting at expiration -- for theoretically unlimited profit potential. However, they will lose no more than the premium paid, should the contracts remain out of the money through expiration.