Dryships (DRYS) shares have been grinding higher today, recently up 30 cents to $6.77 amid relative strength in the dry bulk shippers Friday (SFL, TK, TNP, GNK, DSX). In the options market, volume has been impressive, with 56K calls and 6,500 puts traded. While action is scattered across a number of different contracts (Jun 7, Jan 6, Mar 7, Jan 7.5, Jan11 10s), Feb 7 calls are the most activves. 15.9K traded and, with about two thirds trading at the ask, it looks like buyers are dominating the action. No news today. DRYS saw a pop Tuesday on chatter about new contracts with two larger drillships — still unconfirmed.

*Scanning all single-stocks subject to 2500 contracts minimum call or put volume

Overseas Shipping Group (OSG) is showing impressive strength and call volume is picking up Wednesday. Shipping stocks (DRYS, EGLE, TBSI, DSX, GNK, EXM, NAT) are seeing mixed trading, but OSG is up $3.94 to $39.40. June 40, July 40, and July 45 calls are the most actives. Looks like speculative call buyers driving a lot of the action and looking for OSG to continue its recent running higher over the next few days and weeks. Implied vols are little changed at 63 percent.

Stocks bounced around in morning trading, but the Dow Jones Industrial Average has battled back and is holding modest gains midday.

Stock index futures rallied before the stock exchanges opened after the Labor Department reported that the US economy lost 345,000 jobs in May. The number was significantly better than the 520,000 loss economists had expected.

However, investors sold into the early strength, as the news sparked a sharp rise in bond yields and a rally the dollar, which also sent crude oil and gold prices sharply lower. After hitting a high of $70 in early trading, crude fell into the red shortly after the payroll data.

Another reversal in mid-morning trading helped lift the equity market and the situation had stabilized by midday. Crude is back to unchanged at $68.80. Gold is still reeling, down $21.40 to $96.90 on dollar strength.

The buck is still holding higher ground, as higher bond yields attracts flow to the buck. The dollar is up 1.45 to 98.07 on the yen. The euro is taking a hit and dipped back below 1.40 against the greenback.

Meanwhile, the benchmark ten-year Treasury is down 23/32nd, but well off session lows. The yield on the ten-year is at 3.83 percent, up from 3.76 percent pre-payrolls, but down from six-month highs above 3.9 percent.

The CBOE Volatility Index (.VIX) is down .96 to 29.22 as stocks recover and event risk has passed. The Dow is up 40 points. Approximately 2.9 million puts and 3.9 million calls traded by Noon eastern time, a ratio of .75.

Puts are active in Genco Shipping (GNK) as the dry bulk shippers (DRYS, DSX, EGLE, EXM) show relative weakness. Shares are down .81 to $24.36 and 10,000 Oct 15 puts traded, including a purchase of 9,600 for $1.30.

Bearish trading is also being seen in PharMerica (PMC), the Currency Euro Trust (FXE) and the Market Vectors Coal Fund (KOL). Bullish trading picked up in a number of the metals companies, including Alcoa (AA), AK Steel (AKS), and Cliffs (CLF).

Genco Shipping (GNK) is down $1.03 to $24.14 amid relative weakness in the shippers (DRYS, EGLE, EXM, DSX) Friday. In the options market, sentiment seems cautious as well. 12K puts traded on GNK so far, compared to 1,460 calls. The volume includes a purchase of 9,600 Oct 15 puts for $1.30. 10K now traded. It might be tied to some shares, as two blocks of GNK totaling 100K trraded at about the same time. Implied volatility edged up to 88, from about 87 the day before.

Diana Shipping (DSX) is up 45 cents to $15.14 as the dry bulk shippers show relative strength after a rough week. DSX is up today, but down 3.5 percent since Friday. GNK, EGLE, DRYS have seen similar action this week (Link to story). In the options market, DSX calls are active, with 6300 contracts traded, or almost 6X the expected midday. June 15 and May 12.5 calls are the most actives and it appears that premium sellers are dominating the action, perhaps on view today’s move is a counter-rally in a bear trend. DSX is down 18.5 percent since May 6.

Dryships (DRYS) April 5 puts are active, as some of the drybulk shippers see relative weakness Tuesday morning. DRYS is down 30 cents to $4.81 and 6,600 April 5 puts traded. Looks like buyers dominating the action. Other names seeing relative weakness, DSX – 5.8%, EXM -7.2%, EGLE -4.4%, GNK -5.9%, TBSI -6.4%, TK -4.5%

Diana Shipping (P/C Chart, news, volatility) options volume is running at 3 times the average daily levels. DSX is up $1.70 to $15.19 on a good day for dry bulk shippers (PRGN, DRYS, EXM, and GNK also seeing relative strength). In the options market, 7,400 DSX calls and 2,350 puts traded. The action includes a buy-write of 1000 Feb 15 calls for $1.15 against 100,000 shares at $15.15.

Eagle Bulk Shipping (EGLE, news, chart, volatility) implied volatility is higher after the company said it was suspending its dividend and said it reached an agreement with China’s Yanghzou Dayang shipbuilding to cut spending by $363 million. The company is seeking to preserve cash amid the downturn. EGLE is down 25.7 percent and implied vols are back to 172, up from about 142 the day before. Other dry bulk shippers (TBSI, DSX, GNK, DRYS, EXM) are lower as well.

Excel Maritime (EXM, news, chart, volatility) options are actively traded, as the drybulk shippers rip higher for a third day. EXM is up $1.72, or 24 percent, to $8.86 and volume in the options market is already running at twice the average daily levels. 6,900 calls and 1,400 puts have traded. Dryships (DRYS), TBS International (TBSI), Eagle Bulk Shipping (EGLE), Diana Shipping (DSX), and Genco Shipping (GNK) are also seeing relative strength.