Eagle Bulk Shipping has been dropping for the last week, and
yesterday the bottom fell out.
The carrier of commodities such as coal and iron ore plunged 11
percent on record volume of more than 12 million shares. Option
activity surged to 10,804 contracts versus the 1,003 daily average,
as investors piled into the puts.
Our Depth Charge tracking system detected heavy buying in the March
4, February 4, September 4, and June 4 contracts. The March puts
were the most active, with 1,700 trading for prices ranging from
$0.10 to $0.25.
Monday saw the purchase of 3,500 March puts for $0.05 and $0.10, so
it appears that at least one trader was looking for yesterday's big
EGLE ended the session at $4.01, about the same level were it
bottomed in July before rallying back with the rest of the market.
The upside lasted for a few months, but then the stock slammed into
resistance at its 500-day moving average (dark blue line on chart)
and started trending lower once again.
The ocean-shipping companies have mostly lagged the rest of the
market since the 2008 crash. Others such as DryShips, Diana
Shipping, and Overseas Shipping Group also failed at their
respective 500-day moving averages late last year.
Puts accounted for a bearish 62 percent of the overall option
volume in EGLE during yesterday's session.
(Chart courtesy of tradeMONSTER)
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