Cruise line Carnival Corporation (CCL) is up 3% over the past year, with shares trading towards the higher end of their 52-week range. One trader sees shares trending higher in the weeks ahead.
That’s based on the July 19 $18.50 calls. With 21 days until expiration, 28,491 contracts traded compared to a prior open interest of 616, for a 46-fold rise in volume on the trade. The buyer of the calls paid $0.68 to make the bullish bet.
Carnival shares recently traded for about $18.30, making this an at-the-money trade. Shares are trending higher and near their 52-week high of $19.74.
The cruise industry continues to benefit from consumer spending trends, which have stayed strong for travel and tourism, even as consumers cut back on spending elsewhere.
Revenues are still trending higher, up nearly 18% over the past year. Carnival trades at about 17 times forward earnings, a slight discount to the overall market.
Action to take: Shares are trending higher, so momentum traders may want to continue playing that trend in the coming weeks. Carnival does not currently pay a dividend.
For traders, the July $18.50 calls are at-the-money. While they don’t have much time to play out, they could see high double-digit returns given their low cost to trade in the time left for the option to play out.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
