IB Options Brief: Carnival Corp. (CCL)

Posted February 27th, 2012 by Caitlin Duffy in Unusual Activity

CCL ñ Carnival Corp.
Bearish activity in the front month options on cruise operator Carnival this morning suggests the price of the underlying shares may sink to fresh 52-week lows in the next few weeks. Shares in CCL dipped to as low as $29.22 following the Costa Concordia tragedy in January and remain depressed more than one month later, with shares today down 0.80% on the session to stand at $29.73 as of 11:55 a.m. in New York.

Traders snapped up in- and out-of-the-money puts to prepare for a CCL pullback, exchanging around 2,295 contracts at the Mar. $28 strike against open interest of 1,154 positions. Most of the $28 strike put options appear to have been purchased for an average premium of $0.31 each, thus positioning buyers to profit at expiration in the event that Carnivalís shares drop 6.9% to breach the effective breakeven price of $27.69.

Mar. $29 strike puts attracted bearish bets as well, with around 1,500 of the contracts purchased for an average premium of $0.59 each. In-the-money puts at the Mar. $31 strike with a price tag of $1.70 apiece were bought some 750 times this morning. Carnival Corp. is scheduled to report first-quarter earnings on March 22, nearly one week after the March expiry put options will have expired. But, investors buying around 1,200 puts at the April $30 strike for an average premium of $1.88 each today may see the value of their contracts rise should shares in the cruise operator drop following the Q1 report next month.

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