Shares of Carnival Cruise Lines (CCL) have been cut nearly in half over the past year. One trader sees a decline in shares continuing in the coming months.
That’s based on the September $12 puts. With 205 days until expiration, 5,672 contracts traded compared to a prior open interest of 181, for a 31-fold rise in volume on the trade. The buyer of the puts paid $2.14 to make the bearish bet.
Shares recently traded for about $11.30, so the option is already about $0.70 in-the-money. Shares have strongly rebounded in recent weeks from their 52-week low of $6.11.
The cruise line is still weathering the effects of the pandemic. Revenues rose 198 percent in the last year, however, that still didn’t lead to a profit. In fact, CCL lost about $6.1 billion.
Action to take: With the economy slowing down, and with fuel prices high, cruise lines may be susceptible to a recession. Interested investors can likely buy at a far lower price in the months ahead, potentially even close to the stock’s 52-week low.
For traders, the September puts have plenty of time to play out. And they’re already in-the-money. Traders can likely nab high double-digit returns with the September puts if there’s any downtrend in shares in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.