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How To Set Sail With Shippers Guided By Options

Jonathan Yates

Of all the sectors ravaged by The Great Recession, shipping was among the hardest hit.

The ETF for shipping, Guggenheim Shipping (NYSE: SEA), now under $22.50, was near $30.00 a share in July 2010.

Shipping stocks such as Baltic Trading (NASDAQ: BALT), Frontier (NYSE: FRO), Nordic American Tankers Limited (NYSE: NAT) and many others all plunged, too.

But now, many are rallying.

That brings up the natural questions for investors: is it safe to get back in the waters? The answer is "yes."

But, is it best to do it by writing covered call options?

Related Link: Time To Write Covered Call Options On BHP Billiton

Covered call options are when the owners of shares of Baltic Trading, Frontier, Nordic American Tankers and other shipping stocks sell, or "write," options on the stock.

Shareholders make money in three ways: by selling the option, pocketing the dividend and then the capital gains if the option is exercised.

Dr. Joseph Louro, founder of Investview (OTC: INVU), an investor education and financial technology firm, advises that the great majority of options are never exercised.

That is a major part of what makes writing covered call options a low risk way to profit for shareholders!

This is ideal for the shipping sector, which still has a great deal of weakness.

But "Big Money" such as hedge funds, private equity groups and other institutional investors are starting buy shipping assets.

or individual investors, that creates an ideal opportunity for writing covered call options.

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