DryShips has been weak for years, but one investor apparently thinks that it's ready to turn around.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 November 2.50 calls for an average premium of $0.145 and the sale of equal number of November 2 puts for $0.10. Volume was more than 5 times open interest at both strikes.
The investor paid just $0.045 to open the trade and is now leveraged to a rally in the ocean-shipping company. The benefit of the strategy is that it provides exposure to the stock at a fraction of the cost of owning shares, positioning the trader for a quick rally. But the options will expire worthless if no move occurs, while saddling the investor with losses if shares go below $2. (See our Education section)
DRYS is down 0.43 percent to $2.30 in morning trading and has lost one-third of its value in the last six months. The company has struggled along with most others in its industry as a weak global economy prevents a rebound in cargo shipping. The stock had fetched more than $100 before the 2008 financial crisis.
Total option volume is twice the daily average so far today, according to the Heat Seeker.
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