Call spread in Royal Caribbean
Chris McKhann | firstname.lastname@example.org
Yesterday's trade involved straight call buying in the November 42 contracts, but today's strategy is more complicated.
optionMONSTER systems show that a trader bought 3,000 of the November 38 calls for the ask price of $2.07 and, at the same time, sold 3,000 of the October 39 calls for their bid price of $0.90. The volume at both strikes was more than open interest, so this was a new opening spread.
We usually see either vertical spreads within the same expiration or diagonal spreads that are farther out of the money and at later expirations. But in this case, the trader is establishing a bullish position while limiting its potential gains in the near term by selling those October calls.
So he or she is really looking for the cruise-ship operator to remain below $39 over the next couple of weeks and then move higher. Those November 38 calls are also in the money, as RCL trades at $38.50 this morning, down 0.4 percent on the day. It was at a high of $40.71 last week and down at support at $36 at the end of August.
Total option volume in RCL is 8,500 so far, compared to the daily average of 1,824 over the last month.