DRYS Starts to Sink and I Jump Ship

DRYS has gotten too risky for me (as if it was ever safe).  After announcing more bad news last night about breaking loan covenants, a week after suspending their dividend, I jumped ship and covered all short positions and sold my long positions while DRYS was much lower than I thought it would go in the near term. I finally have no exposure to DRYS at all for the first time since July 2008.  Had I gotten out two weeks ago I’d have saved $7,500, if not more at the peak, but I was greedy and it cost me.

I bought 600 shares in 2008 of DRYS from three sets of naked puts which were all bad trades obviously.  I sold covered calls as it dropped and even tried to buy puts once, but out of habit sold them and lost more as I waited to close my mistake. 

When DRYS got down near its lows I bought June 2.50 calls.  My entire original plan with buying the June 2.50 calls was to have some exposure through December when I planned to dump my 600 shares for a loss at the end of the month. Instead DRYS rallied huge after I doubled my share exposure and I couldn’t bring my self to sell a stock on the rise.  I decided I should get out and started selling covered calls with the intent of letting the shares get assigned away.  I waited too long for that decision and now my small overall loss turned into a loss over the entire series of $9,803.98.

Today’s trades were:

• With a limit order I sold 600 shares at $9.25 and received $5,539.96 after commissions.
• While trading at 9.41 I bought to close my three February 12.50 calls at .45 each and paid $147.24 with commissions.
• While trading at 9.01 I sold to close my six June 2.50 calls at $6.50 and received $3,885.48 after commissions.
• While trading at 9.06 I bought to close my three February 17.50 calls OOCBW @ 0.1 and paid $42.24 with commissions.

I pasted all of my DRYS related trades from July through today below.  I didn’t take the time to identify the full description of each option, but I think you can get the point.  If you are terribly curious, you can use the search box on the left sidebar to see trade details on each option trade.  I didn’t take the time because the real point of this post is that I got in early on DRYS and didn’t get out at the right time, but thanks to my option trades I’m better off by more than $5,000 than I would have been.  Overall I lost $15,397.99 from the stock trades and made $5,594.01 from the option trades.  Once I get past the wash rule I’ll be working on DRYS again in a month, if the dust has settled some on all the turmoil it’s in now.  The silver lining for me is that I should have enough losses booked already this year based on this mess that all other gains I make over the next 11 months should come without worrying about capital gains.  Especially since most of the option gains were taken last year and I still carried over losses for 2009 too.