Shipping stocks have almost universally gained over the past two years. Many of the sectors stocks, Alexander and Baldwin (ALEX), Knightsbridge Tanker (VLCCF) and TBS International (TBSI) to name three, are up over 30% since the beginning of the year.
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Historically, the shipping industry has been one of the most volatile sectors. However shipping rates remain high with petroleum prices up and company fundamentals are sound across the board.
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Another reason for the incline may be because industry wide companies are replacing their fleet with newer vessels and some analysts believe the supply of vessels isn’t keeping up with shipping demand.
Below, we take a look at a few attractive option trades showing up in a recent PowerOptions covered call search.
Dryships Inc (DRYS) – Dryships owns and operates drybulk carriers worldwide. They generally carry dry bulk commodities like coal, iron, grains, fertilizers, and steel products. As of March of this year, the company owned a fleet of 34 drybulk carriers.
Tidewater Inc. (TDW) – This is a company providing vessels to support offshore drilling. A market that has seen nice gains recently. As of March of this year, the company operated a fleet of approximately 520 vessels. The company provides services like towing mobile drilling rigs and transporting supplies and personnel to and from the rigs. Tidewater is also involved in offshore construction of drilling rigs. The Motley Fool website recently mentioned this company in its top growth stocks report.
American Commercial Lines (ACLI) – This is a company revolving around the operation and manufacturing of barges. Their operations include dry cargo barge transportation and liquid cargo barge transportation on the inland waterways in the United States. Their manufacturing segment designs and manufactures barges for use on inland waterways and coastal areas.
Diana Shipping (DSX) – This Greek company is a direct competitor to Dryships. They also carry dry bulk commodities like coal, iron, grains, fertilizers, and steel products. They do, however, have a substantially smaller fleet of 13 ships.
The PowerOptions blog provides examples of how the average investor can identify the most attractive option trade based on their view of whether a stock will rise or fall. Whatever you opinion, PowerOptions can help you make more informed decisions by using our tools.
The shipping stocks below are looking bullish. An investor might choose to use a covered call investment strategy, but may also use a bull call debit spreads or bull-put credit spreads strategy in a situation where they feel the stock will rise. Conversely, if an investor believes a stock will fall, they might choose bear put debit spreads or bear-call credit spreads.
Potential Trades:
All of the following option trades have 31 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| PowerOptions covered call search Shipping Industry (31 days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
Stock Price |
OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DRYS | $39.49 | DQRFH | 07 JUN $40.00 | $2.55 | 6.50% | 6.90% | 8.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TDW | $64.90 | TDWFM | 07 JUN $65.00 | $2.15 | 3.30% | 3.40% | 3.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACLI | $28.24 | QAKFY | 07 JUN $27.50 | $1.60 | 5.70% | 3.20% | 3.20% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DSX | $22.53 | DSXFX | 07 JUN $22.50 | $0.70 | 3.10% | 3.10% | 3.10% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PowerOptions covered call search Shipping Industry (31 days)
Stock Sym Stock Price OPTION Strike Info Opt Bid % Dnsd. Prot. % If Unch. % If Asgnd DRYS $39.49 DQRFH 07 JUN $40.00 $2.55 6.5% 6.9% 8.3% TDW $64.90 TDWFM 07 JUN $65.00 $2.15 3.3% 3.4% 3.6% ACLI $28.24 QAKFY 07 JUN $27.50 $1.60 5.7% 3.2% 3.2% DSX $22.53 DSXFX 07 JUN $22.50 $0.70 3.1% 3.1% 3.1%
DRYD- Dryships Incorporated. This trade involves the June $40 call option and offers 6.5% downside protection and 8.3% potential profit if the stock is above the $40 strike price at the end of the option period.
TDW- Tidewater Inc. This trade involves the June $65 call option and offers 3.3% downside protection and 3.6% potential profit if the stock is above the $65 strike price at the end of the option period.
Competitors for TDW include: Seacor Holdings Inc. (CKH), Trico Marine Services Inc. (TRMA), Saipem S.p.A. (private), Gulfmark Offshore Inc. (GMRK), and Hornbeck Offshore Services Inc. (HOS).
ACLI – American Commercial Lines. This trade involves the June $27.50 call option and offers 5.7% downside protection and 3.2% potential profit if the stock is above the $27.50 strike price at the end of the option period.
Competitors for ACLI include: American Electric Power Co. Inc. (AEP), Kirby Corp. (KEX), and Ingram Industries Inc. (private).
DSX- Diana Shipping. This trade involves the June $22.50 call option and offers 3.1% downside protection and 3.1% potential profit if the stock is above the $22.50 strike price at the end of the option period.
Competitors for DSX include: A.P. Møller – Mærsk A/S (private), Kawasaki Kisen Kaisha, Ltd. (private), and Mitsui O.S.K. Lines, Ltd. (private).
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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PowerOptions‘ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags] Saipem S.p.A., Ingram Industries Inc., A.P. Møller – Mærsk A/S, Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines, Ltd., ACLI, American Commercial Lines LLC, AEP, American Electric Power Co. Inc., ALEX, Alexander & Baldwin, CKH, Seacor Holdings Inc., DRYS, DryShips Inc., DSX, Diana Shipping Inc., GMRK, Gulfmark Offshore Inc., HOS, Hornbeck Offshore Services Inc., KEX, Kirby Corp., TDW, Tidewater Inc., TRMA, Trico Marine Services Inc., VLCCF, Knightsbridge Tankers Ltd., bear put debit spreads, bear-call credit spreads, bull call debit spreads, bull-put credit spreads, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]