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.
| 07/24/2008 10:59:29 | Sold 2 DQRUM @ 4 | $788.50 |
| 09/22/2008 00:00:01 | Bought 200 DRYS @ 65 | -$13,019.99 |
| 09/22/2008 09:38:12 | Sold 2 DQRJK @ 3.5 | $688.50 |
| 09/24/2008 09:50:24 | Sold 1 DQRJK @ 1.25 | $114.25 |
| 09/24/2008 09:53:58 | Sold 1 DQRJK @ 1.15 | $104.25 |
| 10/06/2008 10:19:32 | Sold 2 DQRWG @ 12 | $2,388.49 |
| 10/06/2008 10:29:00 | Bought 2 DQRWG @ 12.5 | -$2,511.49 |
| 10/21/2008 13:34:39 | Sold 2 DQRKF @ 1.15 | $218.50 |
| 10/21/2008 12:17:52 | Sold 2 OOCWW @ 1.3 | $248.50 |
| 10/28/2008 11:11:16 | Sold 4 OOCKW @ 1.05 | $407.00 |
| 11/03/2008 09:37:21 | Bought 200 DRYS @ 21.9399 | -$4,397.97 |
| 11/21/2008 11:37:47 | Bought 6 OOCFZ @ 2.25 | -$1,364.49 |
| 01/05/2009 10:37:26 | Sold 3 OOCAC @ 0.8 | $227.75 |
| 01/16/2009 10:36:35 | Bought 3 OOCAC @ 0.25 | -$87.24 |
| 01/16/2009 10:36:35 | Sold 3 OOCBW @ 1.6 | $477.74 |
| 01/23/2009 10:12:10 | Sold 3 OOCBV @ 0.7 | $197.75 |
| 11/24/2008 00:00:01 | Bought 200 DRYS @ 17.5 | -$3,519.99 |
| 01/29/2009 09:32:10 | Sold 325 DRYS @ 9.25 | $2,996.24 |
| 01/29/2009 09:32:11 | Sold 75 DRYS @ 9.25 | $693.74 |
| 01/29/2009 09:32:11 | Sold 200 DRYS @ 9.25 | $1,849.98 |
| 01/29/2009 10:51:57 | Bought 3 OOCBV @ 0.45 | -$147.24 |
| 01/29/2009 13:29:44 | Sold 4 OOCFZ @ 6.5 | $2,586.99 |
| 01/29/2009 13:30:50 | Sold 2 OOCFZ @ 6.5 | $1,298.49 |
| 01/29/2009 13:43:01 | Bought 3 OOCBW @ 0.1 | -$42.24 |
| Total Loss | -$9,803.98 |
Man, what a wild ride you had! I’m impressed that you’re manning up and going after DRYS again in 30 days 🙂 Good luck in ’09
Not sure if it’s manning up or being stupid. Until the dust settles on this one I feel I just need to stand clear. Did you see if fell another $2 after I got out? I hate that I waited so long, but doing flips over getting out when I did.
still learning, why would someone buy your june2.50 calls for 6.50 I can’t see thier profit unless they want to be there if the stock crawls back up to 16 Please advise Thank you
Martin,
I sold my calls with no time value remaining just to get out because I was afraid it’d keep falling. DRYS was trading at $9.01 when I sold my calls. That means that someone else who was bullish on the stock bought my calls for $2.51 less than they would have paid for the shares without using options (9.01-6.50=2.51) The only difference is they only have those options for less than five months, but that’s a lifetime for DRYS. That’s the same reason I bought the calls to start with – It cost me less to buy the calls than the shares.