$CCL bears make waves

Bearish Carnival Corp (CCL) option traders who opened downside positions on Thursday are making gains today.

Last Thursday on Jul. 1, our Unusual Activity Tracking systems found that 4,250 Weekly $15.50 puts expiring tomorrow, Jul. 10, were bought for $0.68 as part of a bearish combo, selling an equivalent number of upside calls, with shares at $15.94. This was clearly fresh buying, as volume was well above the strike’s existing open interest of 875 contracts.

Those puts traded for as much as $1.21 today, nearly 2 times their purchase prices. The stock declined 8.97% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

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 opened higher this morning but ended the session lower by 4.83% at $14.58. The cruise line operator announced this morning that it will restart sailing vacations in August.

WEBINAR SPECIAL OFFER

TRY AJ's EQUITY ENGINE

Power your portfolio in 2023 with AJ MONTE

Days
Hours
Minutes
Seconds