By David Russell, reporter at OptionMonster

NEW YORK ( OptionMonster) -- Eagle Bulk Shipping ( EGLE)has been dropping for the last week and on Tuesday the bottom fell out.

The carrier of commodities such as coal and iron ore plunged 11% on record volume of more than 12 million shares. Option activity surged to 10,804 contracts vs. the 1,003 daily average as investors piled into puts that positioned for more downside.

OptionMonster's tracking systems detected heavy buying in the March 4, February 4, September 4, and June 4 contracts. The March puts were the most active, with 1,700 trading for prices ranging from 10 cents to 25 cents.

Monday saw the purchase of 3,500 of the March puts for 5 cents to 10 cents, and so it appears that at least one trader was looking for Tuesday's big drop.

Eagle Bulk ended the session at $4.01, about the same level at which it bottomed in July before rallying back with the rest of the market. The upside lasted for a few months, but then the stock slammed into resistance at its 500-day moving average and started trending lower once again.

The ocean-shipping companies have mostly lagged the rest of the market since the 2008 crash. Others such as DryShips ( DRYS), Diana Shipping ( DSX), and Overseas Shipping Group ( OSG) also failed at their respective 500-day moving averages late last year.

Puts accounted for a bearish 62% of the overall option volume in EGLE during Tuesday's session.

Russell has no positions in any of the stocks mentioned.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.