$CCL bears keep cruising with gains

Bearish Carnival Corp (CCL) option traders who opened downside positions a week ago are seeing exponential gains today.

Last week on Mar. 26, our Unusual Activity Tracking systems found that 3,500 Weekly $9 puts expiring tomorrow, Apr. 3, were bought for $0.30 to $0.45 with shares at $18.18. This was clearly fresh buying, as volume was well above the strike’s existing open interest of 897 contracts.

Those puts traded for as much as $1.53 thus far today, at least 3 times their purchase prices. The stock declined 55.12% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

It is the second winning position for bearish option traders in the name to be posted by Market Rebellion in the last month.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

CCL was last lower this session by 7.22% to $8.16. The cruise line operator priced a 62.5 million share secondary offering at $8.00 per share yesterday after the closing bell.