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Options Update: DryShips, Inc. (DRYS) & The DIRECTV Group, Inc. (DTV)

DRYS – DryShips, Inc.

Investors initiated bullish positions on the Greek drybulk shipping company. Shares of the firm rallied 1.5% to $6.32. Option traders favored the call spread today and utilized the strategy in the January 2010 contract to position for continued upward movement in the price of the underlying by expiration.

Approximately 25,000 calls were purchased at the January 7.5 strike for an average premium of 45 cents each, spread against the sale of roughly the same number of calls at the higher January 9.0 strike for 15 cents apiece. The average net cost of the bullish transaction amounts to 31 cents per contract. DryShips’s shares must rally 23% in order for call-spreaders to breakeven at $7.81. Investors stand ready to accumulate maximum potential profits of 1.19 per contract if the stock surges 42% over the current price to $9.00 by expiration in January.


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DTV – The DIRECTV Group, Inc.

Shares of the second-largest pay television provider in the U.S. are up 1.5% to $29.52. DTV posted third-quarter revenue of $5.47 billion yesterday, exceeding average analyst expectations of $5.4 billion. One option trader tuned in to profits today by rolling an existing bullish position to a higher strike price. The investor originally purchased 4,000 calls at the now deep in-the-money November 25 strike for 1.95 apiece on October 13, 2009. The trader sold the calls for 4.80 each today, taking in net profits of 2.85 per contract, for a total of $1.14 million.

Next, the same investor reestablished a long call position at the in-the-money December 29 strike, purchasing 4,000 calls for a premium of 1.80 each. The DTV-bull can accrue additional profits if shares rally at least 4% from the current price to surpass the breakeven point at $30.80 by expiration.

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