In article “U.S. Trade Deficit – Ocean Shipping – Covered Calls” we analyzed the shipping industry in light of world trade and the U.S trade deficit. We decided the shipping industry was looking bullish and a covered calls stock options strategy might be a fruitful investment. Three of the four positions we selected were fully profitable and the average return of the positions was +2.2%.
Interestingly, the GMR position paid out a huge $15 dividend during the holding period. The lone loser was TOPT with a loss of -2.1% on the position, but the loss for the covered calls position for TOPT was not nearly as large as a straight long position which would have resulted in a loss of -4.1%.
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Even though the U.S. economy has slowed, mostly as a result of the housing bust and the subprime meltdown, the global economy has perked up rather nicely clocking in with a 5.4% growth rate last year.
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With the sweet spot the world economy is currently experiencing, the prospects for the shipping industry look attractive as well. Using PowerOptions powerful stock options search tools, we discovered the following covered calls stock options positions for shipping companies.
| PowerOptions covered call search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
Option Sym |
Expire &Strike |
Opt Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd. |
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| SFL | 29.72 (-0.11) | SFLFF | 07 JUN 30.0 (47) | 0.7 | 2.4 | 2.4 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OSG | 70.90 (-0.01) | OSGFN | 07 JUN 70.0 (47) | 3.2 | 4.5 | 3.4 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOPT | 4.67 (-0.04) | QLTFA | 07 JUN 5.0 (47) | 0.1 | 2.1 | 2.2 | 9.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The SFL position is a new position from last month with a maximum potential return of 3.4%. The price of SFL must increase to or above the call option‘s $30 strike price in order for the maximum potential return to be experienced.
The TOPT position has the highest potential return of 9.4%. To achieve the 9.4% return the price of TOPT must increase to $5 or above.
The OSG position has the largest downside protection at 4.5%. As long as the price of the OSG stock does not decrease more than 4.5% at options expiration, the position will be profitable.
Competitors:
Competitors for SFL include: General Maritime Corp. (GMR), Overseas Shipholding Group Inc. (OSG), and Teekay Shipping Corp. (TK).
Competitors for OSG include: Frontline Ltd. (FRO), Teekay Shipping Corp. (TK), Mitsui O.S.K. Lines, Ltd. (private), General Maritime Corp. (GMR), Nordic American Tanker Shipping Ltd. (NAT), OMI Corp. (OMM), Ship Finance Intl. Ltd. (SFL), and Knightsbridge Tankers Ltd. (VLCCF).
Competitors for TOPT include: Frontline Ltd. (FRO), Teekay Shipping Corp. (TK), and Tsakos Energy Navigation Ltd. (TNP).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags] Mitsui O.S.K. Lines, Ltd., FRO, Frontline Ltd., GMR, General Maritime Corp., NAT, Nordic American Tanker Shipping Ltd., OMM, OMI Corp., OSG, Overseas Shipholding Group, SFL, Ship Finance Intl. Ltd., TK, Teekay Shipping Corp., TNP, Tsakos Energy Navigation Ltd. ASA, VLCCF, Knightsbridge Tankers Ltd., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]