DryShips Inc. (DRYS) Option Bulls Climb On for the Long Haul

The Nasdaq sent DryShips Inc. (DRYS) a delisting warning

by Karee Venema

Published on Apr 16, 2015 at 10:49 AM
Updated on Apr 20, 2015 at 5:32 PM

DryShips Inc. (NASDAQ:DRYS) is following in the bearish footsteps of the broader equities market today, down 2.8% to trade at $0.77. In the equity's options pits, meanwhile, call volume has soared to 10 times what's typically seen at this point in the day, and it appears nearly all of this morning's speculators are betting on DRYS to bounce higher over the next nine months.

Specifically, the security's January 2016 0.50-strike call is in high demand, with 3,501 contracts on the tape at last check -- roughly 95% of the day's total intraday volume. It looks as though new positions are being purchased for a volume-weighted average price (VWAP) of $0.40, making at-expiration breakeven for the speculators $0.90 (strike plus VWAP). Should the shares be sitting south of $0.50 at January options expiration, though, the most today's call buyers stand to lose is the premium paid.

Widening the sentiment scope reveals traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown a preference for long calls over puts in recent weeks. Specifically, the stock sports a top-heavy 20-day call/put volume ratio of 16.40 across this trio of exchanges.

Technically speaking, it's been a rough road for DryShips Inc. (NASDAQ:DRYS). Over the past 52 weeks, the shares have surrendered more than three-quarters of their value. In fact, the shares have not closed north of $1 since Feb. 25, prompting the Nasdaq to warn the company of a possible delisting.

Daily Chart of DRYS Since April 2014

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