DryShips Options Rise on Speculation Shipper Will Reverse Slide

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

29 Nov 2007

Options traders increased bets that DryShips Inc., the bulk shipper that's tumbled this month after surging sevenfold in 2007, will resume its rally.  Bullish options bets outnumbered bearish ones today by about 3-to-1 as shares of the Athens-based shipper snapped a five-day losing streak, climbing 5.6 percent to $73.60 as of 3:01 p.m. in Nasdaq Stock Market composite trading. The most-traded contracts were January $75 calls, which rose 32 percent to $10.70 and earlier rose as high as $11.80.  ''Investors want to own the options and they're primarily focusing on the calls,'' said Mike Thurow, an options strategist at Susquehanna Financial Group in Bala Cynwyd, Pennsylvania. ''I'd label it bullish.'' The second-most-active contracts, December $90 calls, climbed 36 percent to $2.65. For those wagers to pay off, the shares must advance 29 percent from yesterday's close before they expire on Dec. 22. ''It could easily do that,'' said Natasha Boyden, a Cantor Fitzgerald analyst. ''The stock is certainly volatile enough.'' DryShips began the year at $18.01 and reached a record $130.97 on Oct. 29. The stock then tumbled 47 percent through yesterday on declining rates for ships that carry raw materials and a report that Chinese steel producers are taking a tough negotiating line to fix next year's iron ore price. The VIX The benchmark for U.S. stock option prices, the Chicago Board Options Exchange Volatility Index fell 4.7 percent to 27.56. Lower readings in the so-called VIX, derived from prices paid for Standard & Poor's 500 Index options, indicate traders expect smaller share-price swings in the next 30 days. The S&P 500 advanced 0.4 percent. The price of the most-active contracts tied to the VIX, December 27.5 calls, fell 7.7 percent to $2.40. Regions Financial Corp. implied volatility, the key gauge of options prices, rose to a seven-year high of 68.64 percent after Punk, Ziegel & Co. analyst Richard Bove raised his rating on the biggest bank based in Alabama to ''buy'' from ''market perform.'' The bank rose the most since October 2005, adding 6.7 percent to $24.55 on the New York Stock Exchange. The most-active calls, January $25 contracts, doubled to $2.