Options Traders May Think Carnival Will Keep Sailing Higher

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Carnival is the top-performing member of the S&P 500 in June, and one big options trader may think it will keep sailing over the summer.

Check out this unusual options activity yesterday in the cruise-ship operator:

  • 20,000 August 16 calls traded for $0.83.
  • 20,000 August 20 calls traded for $0.14.
  • Volume exceeded open interest in both strikes, which suggests new positions were opened.

The transaction appears to be a vertical call spread, which can profit from a rally with limited cost. Buying calls fixes the price where investors can purchase a security. They can also be sold to generate premium and lower the cost.

Tuesday’s spread would have cost $0.69. It could expand to $4 if CCL closes at or above $20 on expiration. That’s a potential return of 480 percent from a 31 percent move in the underlying shares. (They were quoted at $15.28 at the moment of the trade.)

CCL rose 8.8 percent to $15.88 yesterday and is up 41 percent so far this month. The travel stock lost about 90 percent of its value between early 2018 and early 2020. It hit a 30-year low in October, and has worked steadily higher since on signs of travel demand improving.

Carnival (CCL), daily chart, with select events and indicators.

The shares jumped to a new 52-week high on June 12 thanks to an upgrade by JPMorgan. The company also reported better-than-expected earnings and revenue on Monday.

Overall option volume was slightly above average in the stock yesterday, according to TradeStation data. Calls accounted for a bullish 75 percent of the total.


Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See Characteristics and Risks of Standardized Options. Visit www.TradeStation.com/Pricing for full details on the costs and fees associated with options.

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