Is RCL About to Cruise Higher?

Royal Caribbean Cruises RCL – NYSE

Thursday, April 13, 2017

It’s been smooth sailing for cruise ship stocks in 2017, with Carnival CCL – NYSE up 10.4% and Royal Caribbean Cruises RCL – NYSE even higher at 15% year-to-date gains.

With the waters so inviting, a trader bought 4,000 RCL January 100/125 bull call spreads earlier in today’s session.

RCL

At $5.50 per spread, this trade cost $2.2 million. And given the break-even price at expiration of $105.50, RCL has to increase 11.8% for it to pay off.

Expect resistance at the all-time high of $103.40, but if RCL can trade all the way up to the short strike at $125 (+32.9%) this trade will realize its maximum value. At this lofty level, each spread would be worth $25, good for total profits of $7.8 million.

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