Get Ready For A Move In Dryships -DRYS (Charts, Call Options Active, Links)

I hope you like information overload. Is DryShips about to explode? $DRYS is being strangled in a symmetrical triangle and DRYS will explode in one way or another soon. Today's pierce of the 50 day moving average could help with an upside test. The Baltic Dry Index (shipping cost index) is up 39% in a month, while DRYS is only up 2.07%. BDI/DRYS diverged from July to September (BDI trended lower/DRYS trended higher). They don't always dance together (BDI is spot, DRYS contracts mostly fixed), but it is the overall barometer of dry bulk shipping costs. Here is the DryShips Q3 Presentation (via Dryships.com/IR), press release and info on a $71 million debt waiver ($117M to go.. they have debt issues). This post is focusing on the chart and option activity for a trade.

DryShips Q3 2009 Presentation

DryShips Reached Agreement With Commerzbank, West LB on Waiver Terms for $70M of Debt (MarketWire)
Little Cargo, Loads of Debt (11/11-NYT)
Shippers Soar on Earnings Beats, Surging BDI (IndieResearch)
World's Scariest Stocks: DryShips (Motley Fool)
DryShips Posts Shipshape Quarter (TheSreet.com)
DryShips says no contracts for drillships yet (Reuters)

I came across DRYS because of the option activity on the ISE. On the ISEE widget on the side of my blog I saw that DRYS had bullish activity. As of 3:30p DRYS had an ISEE (ISE customers opening long calls/puts)*100) of 13,115 with 19,279 calls and 147 puts. That is a huge number. The total options traded was 3.6x average volume with call volume 18x puts. Implied volatility was up 7.5% today to 71 with historical volatility up the same to 64.

Call activity in November was active in the 6-7 strike. 6k traded at the $6 strike w/ 13k open and 12k traded at the $7 strike w/ 30k open. Total November put volume was just above 2k. December had 6.6k trade at $7 strike and 2.6k at $8. Total Dec put volume was less than 1k. Most notable activity occurred in January. CrimsonMind.com reported a $7.50-$9.00 call spread:

"Jan 7.50 were purchased for an average premium of $0.46 per contract and Jan 9 calls were sold for an average of $0.16 apiece, a net debit of $0.30" (CrimsonMind)

A total of 36k Jan $7.50s traded with 17,971 open and 40.9k Jan $9s traded with 29,458 open. Less than 1k put contracts traded in January. So what does all of this volume see going forward? Read all the articles below and watch DRYS trade live. A move is coming, watch the charts and stay hedged. It could be bi-polar.

Rally Boosts Shipping Firms (MyHappyTrading/SeekingAlpha)
Your First Move For Thursday November 12th (Pete Najarian)
DryShips Inc. Draws Bullish Debit Spread Attention (SchaeffersResearch)
Unusual Options Activity - ALKS, IPI, SIGM, AMAT, PNC, M, TOL, SUNW, DRYS, MON, PCS (OptionsInsider)
"$DRYS spreaders active trading 34k Jan 7 call contracts and 40k Jan 9 calls; volatility low at 71" (@CBOE)
Options Update: DryShips, Inc. (DRYS), (DTV) (AndrewWilkinson)
Mixed Sentiment in DryShips, Inc. (DRYS) (ONN.tv/Video)

DRYS (Dryships) Short Term (Courtesy of Stockcharts.com)

DRYS (Dryships) Long Term (Courtesy of Stockcharts.com)

DRYS Trading Live!