DryShips (DRYS, $5.68, up $0.78) is up nearly 20% and has been strong all day. The stock opened this monrning at $5.05 and has traded as high as $5.85. The company came out of nowhere and said they will announce earnings after the bell today. I didn’t have an earnings date for the company so the news could be really, really good or really, really bad.

DryShips just got a huge order last week for a three-year exploration drilling contract worth $630 million. I’m not too worried about the company’s earnings and wanted to play the momentum this morning. The April 5 calls (OOCDA, $1.30, up $0.60) opened at 75 cents and have nearly doubled. We got in at $1.03 this morning and have a decent return but here is the kicker.

As much as I’d like to leave the trade open, it’s just too big of a risk to leave it open because of the unknown. My gut feeling is that the stock goes higher but that doesn’t pay the bills. We could leave half of the position open but that would still expose us for a potential loss if the stock falls back below $5.

I will probably close the trade out today but there is a slew of action in the April 7.50 calls (OOCDU, $0.45, up $0.22) as volume has now surpassed the action in the April 5 calls.

Rick Rouse