Traders think Carnival will stay afloat

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Carnival is rebounding from a nine-month low, and traders see no going back.

optionMONSTER's tracking systems detected the sale of more than 3,000 August 36 puts, most of which priced for $1.55. Volume was almost 70 times open interest in the strike.

The trades reflect a belief that the cruise-ship company has limited downside. If the trader is right, he or she will get to keep the premium. If the bet is wrong, the trader will have to buy shares for $36. Given the credit received today, the position will make money as long as CCL stays above $34.45.

The shares are up 3.47 percent to $36.97 in afternoon trading but have lost more than one-fifth of their value since mid-February. Today's pop came after CCL's second-quarter earnings and revenue beat forecasts.

Management cut full-year guidance, citing global events such as conflict in the Middle East and the Japanese earthquake. But investors now seem to be focusing on the company's long-term strengths, which include the ability to increase prices after the introduction of new vessels.

Overall option volume in the name is 6 times greater than average so far today.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: CCL

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