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Bulls bet Carnival will steam ahead

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are looking for a rebound in beaten-down Carnival by early next year.

optionMONSTER's Heat Seeker system detected heavy buying in the January 34.50 calls, which saw nearly 8,000 contracts trade for $0.65 to $0.73 yesterday afternoon. These are clearly new positions, as the volume was well above the strike's previous open interest of 1,542 contracts.

These long calls lock in the price where traders can buy the stock through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $34.50. (See our Education section)

CCL fell 1.46 percent yesterday to close at $31.72. The cruise-line operator gapped down from above $37 after reporting earnings and lowering guidance on Sept. 24 but has been trying to find support around the $32 level in recent days.

Total option volume in the name topped 14,700 contracts yesterday, nearly triple its daily average for the last month. Overall calls eclipsed puts by more than 4 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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