Dryships (DRYS), as with every other drybulk shipping company on the market, has taken a tremendous beating recently. Back in November, with the general market, Dryships (DRYS) hit its 52 week low of $3.04, and then charged back up the next 45 days to around $17.00 a share netting brave investors in the company a solid 400% gain in less than 60 days. While analysts estimates went down again within the last couple of days, from $5.02 to $3.76, the Baltic Dry Index has just recently come off its lows of about $660 to a recent close of $1070. One can argue also that analysts estimates are more than likely off, or at least behind the market.
I feel that a safe way to profit from this wildly volatile stock in an already volatile market would be investing in medium-term Dryships (DRYS) call options with an expiration of June 2009, and a strike price of $2.50. I put in a limit order for $2.50, which leaves me at a break even amount for the trade of $5.00. Anything over $5.00 between now and the 3rd Friday in June is purely profit and i expect to sell the options closer to now than to June and cash in on some of extrinsic value that should be left.
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