The incredible post-election spikes in a group of shipping stocks led by DryShips Inc. DRYS 8.82% has resulted in daily financial media discussions about the Baltic Dry Index. However, many traders that don’t trade shipping stocks may not be familiar with what exactly the Baltic Dry Index (BDI) is and why it matters so much for DryShips and others.

The BDI

The BDI is a measure of daily charter rates for a range of dry bulk shipping carrier sizes, including handysize, supramax, panamax and capesize. These dry bulk carriers carry raw materials, such as coal and iron ore, overseas.

The BDI itself is not a security that traders can buy or sell on the market, but it is a bellwether for what traders can expect from shipping stocks.

BDI’s Movements

Since November 2, the BDI has risen eight consecutive days from 834 to 1,084. The index has opened Wednesday morning’s session up for a ninth straight day. While the units in which the index trades are arbitrary, the rates the index represents are certainly not.

DryShips is…

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