Thursday, October 7, 2010

Continue to Hold/Buy DryShips

I have previously provided analysis to buy DryShips on Sept 30th at $4.83. I am now following up on my analysis on this stock and after more than a week.

I am continuing to hold on this stock. I believe the sell volume are increasingly subsiding and I believe a bigger push will emerge later after a sound consolidation. I believe the coming push will be able to overcome the resistance of $5.00 and possibly head towards the $7 level and above.

Even though, I have invested all my money in DryShips at $5, I still have faith in this stock believing that it will cruise to the $7 level and above in smooth sailing.

Moreover, on the option report. It does clearly indicate the call option is reigning over the put option as per below:-
Calls are the options of choice today on Delcath Systems, Inc. (DCTH), as traders respond to a dramatic rise in the stock's price. Meanwhile, calls are also popular on DryShips Inc. (DRYS) -- even as the equity continues to back away from stubborn technical resistance.
by: Edmund Gaultier
Roughly 13,000 calls have traded so far on DCTH, outpacing the stock's average daily volume by more than eight times. Most active is the equity's November 9 call, where 5,062 contracts have traded -- but the October 8 strike isn't far behind, with 3,334 contracts changing hands. Most of these calls have traded at the ask price, suggesting they were most likely purchased.
DCTH has spiked more than 11% today to trade near $8, with unsubstantiated buyout rumors driving the stock higher. The shares are now struggling to break out above their 200-day moving average, which hasn't been surmounted on a daily closing basis since Aug. 12.
Meanwhile, call volume on DRYS has accelerated to 1.28 times the norm, with roughly 5,400 contracts crossing the tape by midday. The equity's January 2011 7.50-strike call is most active; a total of 2,535 contracts have traded here, with 99% changing hands at the ask price. Implied volatility has jumped by 3.5 percentage points at last check, so it seems that buyers are driving the bulk of the activity at this out-of-the-money strike.
DRYS has backpedaled 1.3% this afternoon, with the shares extending their retreat from familiar resistance in the $5 neighborhood. This region is now home to the stock's descending 40-week moving average, which could create an additional layer of resistance for DRYS.

-posted by Elizabeth Harrow (

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