Bullish option traders have made exponential profits in Royal Caribbean Cruises (RCL).
On Jun. 6, Market Rebellion’s Unusual Option Activity Service found that 4,000 Weekly $95 calls, expiring this Friday, were bought for $1.80 with shares at $90.62. This was clearly fresh buying, as open interest in the contract was just 48 before the activity appeared.
Those calls have traded for as much as $5.45 today, a 202.78% return, while the stock rose 10.65% in the same time period, underscoring how 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.
RCL was last up 3.43% today at $100.60.
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