One investor thinks that Carnival is dead in the water.
The cruise-ship operator has been bobbing up and down since the
market sold off in August, staying mostly between $29 and $34.
Today's option activity is looking for shares to remain in the
upper end of that range for the next five weeks.
About 5,000 November 32 puts were sold for $0.95, and an equal
number of November 35 calls were sold for $0.75 to $0.85, according
to optionMONSTER's systems. Volume was more than twice open
interest in both strikes.
Known as a
, the trade generated income of $1.75. If CCL closes between $32
and $35 on expiration, the position will expire worthless and the
trader will walk away with the credit as profit. Gains diminish and
will eventually turn to losses outside that range.
CCL dropped 0.08 percent to $33.39 in morning trading. Its last
earnings report on Sept. 20 beat estimates as management raised
prices, but it has lost some bookings as political and economic
worries hurt European demand. Management also cited rising fuel
Implied volatility has been climbing in CCL and is now about 45
percent, versus the 35 percent area earlier in the year. That means
that option premiums have increased, which could make some traders
want to sell calls and puts. (See our
section for more on
trades that make money from the
passage of time
rather than directional moves.)
Overall option volume in CCL is almost twice the average level so
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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