RCL Surges After CDC Allows Test Cruises

The security sports attractively priced premiums at the moment

Digital Content Manager
May 26, 2021 at 10:34 AM
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The shares of Royal Carribean Cruises Ltd (NYSE:RCL) are up 2.8% at $91.51 at last check, after the Centers for Disease Control and Prevention (CDC) allowed the company to start running test cruises from Miami in late June. The tests are required for ships that cannot ensure all passengers and crew are vaccinated against Covid-19, and will sail off with volunteer passengers in order to test new virus protocols, which include coronavirus testing.

On the charts, the security has faced some choppy waters since surging to a Feb. 25, annual high of $99.23. However, shares have just broken through overhead pressure at the $88 mark, which had been in place since late April. The equity has also regained the support of its 100-day moving average, and has added more than 84% year-over-year.

Analysts remain bearish towards Royal Caribbean Cruises stock, with seven of the 12 in coverage carrying a "hold" or worse rating, while five say "strong buy." In other words, the stock could surge even higher, should some of this negative sentiment begin to unwind. 

The options pits are far more optimistic, with calls reigning in popularity. This is per the equity's 10-day call/put volume ratio of 2.58 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the 96th percentile of its annual range.

Echoing this, Royal Caribbean Cruises stock's usually quiet options pits are brimming with bullish activity today. So far, 6,955 calls have been exchanged in the first hour of trading, which is twice the intraday average. Most popular is the monthly June 100 call, followed by the weekly 5/28 91-strike call, with new positions currently being opened at the latter.

Now seems like an opportune time to bet on RCL's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 44% stands higher than only 2% of all other readings from the past year, suggesting options players are pricing in lower-than-usual volatility expectations at this time -- a boon for premium buyers.

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