Add DRYS Calls

Bounce Off 50-Day

By Bryan Bottarelli
Friday, May 15, 2009 11:04 AM EDT
Fri, 15 May 2009 15:04:00 GMT

PLAY: Buy the DRYS June 7.50 Calls (OOC FU) at or under $1.20, good for the day. Place a protective stop limit at $0.45 and a pre-determined sniper sell at $2.00.

Dear Bottarelli Research Member,

Good morning.I’ve mentioned in previous alerts that an up-tick in global trade could offer a boost to Greek-based dry bulk carrier DryShips (DRYS – NASDAQ). In many respects, DRYS has been one of the most volatile stocks you can trade. After all, they hit a high of $116.43 on May 19th 2008 followed by a low of $2.72 on March 3rd 2009. What a range! Now here’s what I find interesting. In recent trading, the Baltic Dry Index has been moving higher — as you can see from the chart below.

BDI

But at the same time, DRYS had moved lower, largely due to concerns over the debt levels that carry with HSH Nordbank (the facility that covers 23 of their dry bulk vessels). But today, it was announced that DRYS has reached an agreement with HSH Nordbank on waiver terms for $654 million of its outstanding debt. As a result, shares are popping higher, and I’d like to ride this upside momentum using June calls. As you cans see from the chart below, DRYS can really move up quickly, so let’s jump on board now!

DRYS

PLAY: Buy the DRYS June 7.50 Calls (OOC FU) at or under $1.20, good for the day. Place a protective stop limit at $0.45 and a pre-determined sniper sell at $2.00.

And as always…

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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