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Eagle Bulk Shipping Sees a Flood of Longer-Term Put Activity

But are today's put players actually on board EGLE's bearish ship?

by 1/25/2012 1:29 PM
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Eagle Bulk Shipping (EGLE - 1.33) has been deluged by put players today, as approximately 3,000 of these options have changed hands so far, which is six times the equity's expected daily volume. Close to 2,900 puts were traded at the out-of-the-money June 1 strike -- the majority of them at the bid price, pointing to seller-fueled activity. This option is currently home to peak put open interest of 9,189 contracts, so it's unclear whether new positions are being initiated here.

This affinity for puts over calls is more of the same for EGLE. The Schaeffer's put/call open interest ratio (SOIR) stands at 2.10, confirming that puts more than double calls among options slated to expire within the next three months. This ratio ranks in the 86th percentile of its annual range, which means that near-term options traders have been more put-heavy toward the stock just 14% of the time during the past 12 months.

What's more, the marine transportation firm sports a 10-day put/call volume ratio of 8.59 -- according to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- indicating that puts bought to open have outnumbered calls by more than eight to one during the past two weeks. In fact, this ratio sits just five percentage points shy of a yearly acme, signaling that speculators have been snatching up bearish options over bullish at an almost annual-high pace.

On the technical front, however, EGLE has gained around 41.5% year-to-date, and has bested the broader S&P 500 Index (SPX) by nearly 29% during the past month. A look at the charts shows that the stock is currently testing its 20-week moving average, which -- along with its 10-week trendline -- has served as stubborn resistance for more than a year. In light of this recently positive price action, today's options traders could be selling puts as neutral-to-bullish bets on the stock.

In the afternoon hours of the session, EGLE is up about 0.8% and is trading at $1.33.


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