What happened

Shares of dry bulk shipping stock Castor Maritime (NASDAQ:CTRM) rushed out of the gate this morning, running ahead more than 9% before stumbling, retreating, and giving up most of its gains.

As of 10:15 a.m. EDT, Castor Maritime is hanging onto a 3% gain -- but why did it rise in the first place?

Stack of pennies, magnifying glass, and calculator lie on a paper with the words Penny Stocks

Image source: Getty Images.

So what

The answer, in three short letters, is the BDI.

Since the start of this year, the Baltic Exchange Dry Index (BDI), which tracks the rates shippers like Castor Maritime can get for hauling dry bulk goods (e.g., coal, iron pellets, and grain) across the ocean, has been surging ever higher. From a starting point below 1,400 at the beginning of 2021, the BDI literally doubled in value through yesterday's close, at 2,808.

Castor Maritime, as an ocean-going hauler of dry bulk goods, is naturally benefiting from this trend.

Now what

And yet, if you cast your eyes across the rest of the dry bulk shipping sector today, you'll see that fellow dry bulk stocks like Danaos Corporation (NYSE:DAC) and Star Bulk Carriers (NASDAQ:SBLK) aren't enjoying nearly Castor Maritime's gains. Both are up about 1% apiece, give or take, and neither experienced anything like Castor Maritime's early morning surge.

Presumably, this has more to do with Robinhood traders and WallStreetBets mania than with anything so mundane as price performance of the BDI. In contrast to Danaos (which costs $53 and change) or Star Bulk ($18-ish), Castor Maritime is a mere penny stock that has spent the past month trading under $1. As such, it's much more subject to price swings as daytraders play its rises and slumps.

If you insist on owning it, you'd better be prepared for the kind of volatility that we're seeing today, and for outsized swings in response to any wobble in the BDI.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.