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Bears take a stab at Royal Caribbean

David Russell (david.russell@optionmonster.com)

Bulls have made money in Royal Caribbean, but now the bears want a shot.

On Tuesday, optionMONSTER's tracking systems showed unusual buying in the August 36 calls for $1.07 to $1.14. Shares pushed higher the next session, and those contracts traded for as much as $1.90.

But this time the paper shifted to the downside, with 3,000 August 37 puts bought for $1.49 and an equal number of August 34 puts sold for $0.41. Volume was more than 17 times open interest at both strikes.

The new position is a bearish put spread . It cost $1.08 and will expand to $3 if the cruise-ship operator closes at or below $34 on expiration. That's a profit of 178 percent from a drop of less than 10 percent in the stock price, which shows the kind of leverage that can be achieved with options. (See our Education section)

RCL rose 2.88 percent to $36.83 yesterday but has gone essentially nowhere for 2-1/2 years. It's struggled with negative headlines in the industry and a fire in May but has recently seen better European demand.

Overall option volume was 5 times greater than average yesterday, with puts accounting for three-quarters of the total.



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