$CCL bulls make waves

Bullish Carnival Corp (CCL) option traders who opened upside positions this week are making gains today.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity on two separate occasions in calls that expire on Feb. 5.

–On Jan. 26, 2,000 Weekly, Feb. 5 expiring, $19 calls were purchased for $1.07 as part of a bullish roll above open interest of 1,318 contracts with shares at $19.25.
–On Jan. 27, 18,000 more of the same Weekly, Feb. 5 expiring, $19 calls were purchased for $0.58 to $0.88 above the open interest of 3,388 contracts, and adding to the previous day’s trade, with shares at $18.07.

Those calls have traded for as much as $2.43 today, at least double their purchase prices. The stock rose by as much as 13.95% in the same time frame, illustrating how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

CCL opened higher this morning to trade up to $20.67 and ended the session up by 4% at $19.74.