Put buyers tread cautiously in Genco

By David Russell,

Shutterstock photo

Genco Shipping exploded higher yesterday, but buyers are treading cautiously.

optionMONSTER's Depth Charge tracking system detected the purchase of about 2,200 March 8 puts for $0.70 and $0.75. Volume was more than 4 times open interest in the strike.

GNK rose 14 percent to $9.02 yesterday. The debt-laden shipping stock began dropping in late-2009 and hit an all-time low below $5 last August, but it has been recovering since then and started to accelerate recently. The stock just broke through its 200-day moving average and is up 25 percent in the last week.

The puts were probably bought by investors who are also buying shares but want protection against a potential reversal. The activity was similar to option flow the previous session in Trina Solar . Both companies are attempting to rebound from long-term downtrends. (See our Education section for more on protective strategies.)

Overall option volume in GNK was 4 times greater than average in yesterday's session.

Other shipping companies including DryShips and Eagle Bulk Shipping have also been climbing off all-time lows recently, and value investors may consider the industry attractive on a bet that the global economy is poised for recovery.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: GNK

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