Tuesday, January 19, 2010

DRYS is back on...

Please see my oringal analysis on the Dry Bulk shippers on this one.

I am still convinced that DRYS will make a substantial move once it can blow past $7-$8. I have set an initial target on this thing to $15. This does not mean however that I am expecting to hold onto the position to get here, but it at least shows there is room for my position to run and yield a decent gain.

Today I sold -5 of the Jan '12 7.50 puts for 2.85 and bought 10 Jun '10 7 Calls at 0.62 a piece. The total credit collected is $805. What is the rational. I was willing to buy 2 calls for every 1 put that I sold because this esentially gives me a 5.89 breakeven price or the price it would cost me to purchase the stock if I were exercised. As I have already stated I think that this name is undervaled but the area around $6 is where heavy support lies.

1 comment:

  1. I forgot to mention that this is a third of what I am willing to do. I am willing to add more between 5.5-6 (here I would add another 3rd). The last place I would look to add would be if it pulled all the way back to $5, which I think is unlikely.