Large spread targets Royal Caribbean
Chris McKhann | firstname.lastname@example.org
RCL was up 0.11 percent to $26.31 on the last session before the July 4 holiday, its best close since May 8. Shares were just above $22 a month ago, its lowest levels since the October lows.
More than 6,800 each of the August 25 and September 27 calls traded in unison. Big blocks of 6,100 changed hands, the August calls bought for the ask of $2.39 and the September contracts sold for the bid price of $1.65. The volume in August was less than open interest, so that could have been an opening or closing transaction.
If it was an opening trade, this was a short diagaonal spread. Such trades can profit if shares mover sharply in either direction, though this one would have a bullish bias.
If it was a closing position, then this would be rolling short calls to a higher strike and a later date. The trader would be left with short calls at the September 27 strike, a bet that the stock won't be above that price by expiration. In that case, it would be likely that they are being rolled against long shares as a covered call trade. (See our Education section)