Nerves on edge with Royal Caribbean

optionMONSTER

Royal Caribbean is trying to rebound, but investors remain wary.

optionMONSTER's Depth Charge monitoring system detected the purchase of 5,000 January 20 puts for $0.43 in volume well above the strike's previous open interest of 954 contracts, clearly showing that this is a new position. The trade dominated activity in the cruise-line operator, accounting for about 90 percent of volume so far.

RCL is up 0.24 percent to $33.27 in morning trading. It's been lagging the broader market and has fallen about 2 percent this year as economic weakness in Europe hurts demand. The shares have been trying to bounce at their 200-day moving average in the last week.

Owning puts locks in the price where investors can sell the stock, allowing them to hedge long positions. Today's trader can now enjoy unlimited profits if it rallies, with a guaranteed exit price through early 2014 if it drops. (See our Education section for other ways to manage risk.)

Puts outnumber calls by a bearish 30-to-1 ratio in the company so far today, according to the Depth Charge. Total option volume is about 50 percent greater than average. 

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