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The Options Say .... Watch Dryships

The options market believes something is afoot at Dryships, according to one market observer.

"Keep an eye on Dry Ships for a big move there," she said Thursday on CNBC's "Squawk Box."

"What's interesting is that dry-bulk shipping is an interesting sector play because it sort of represents the confluence of the commodities boom and the credit crunch. It's like right there at the vortex, so something is going to happen in this sector. It's really very interesting. These dry-bulk shipping companies, their share prices have gone way, way up, because of shipping rates. They've been very high, and, of course, they've been able to charge these rates because there's been a limited supply of container ships, and continued high demand for commodities.

"This naturally begs the question that there's got to be a pull-back in rates at some point when fleets expand, or demand slows down, but there was news out this week that as many as $14 billion in open orders for new container ships could be threatened, because shipping companies have been having a hard time doing credit for these ships. Add to that the fact that steel prices are very high, which is going to make it possibly prohibitively expensive to build these ships, and demand for soft commodities, for grains, as well as harder commodities continues to be very high, so that could prolong the bullish outlook for shipping rates. This is important to keep in mind when you look at a company like Dry Ships , which is a leader in the sector, and which (is expected to be) reporting earnings on Monday. So keep an eye on Dry Ships for a big move there. It's 1.7 calls moving for every put, so, all things being equal, that's bullish."

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