Cruise Stock Moves Higher on Upbeat Quarterly Results

Options bulls are already blasting the security in response

Digital Content Manager
May 10, 2022 at 10:29 AM
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Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) stepped into the earnings confessional this morning to report narrower-than-expected first-quarter losses of $1.82 per share. While the company also reported a revenue miss, it now expects operating cash flow for the current quarter to be positive, and said booking trends remain strong as its fleet of cruises returns to sailing following a long period of Covid-19 restrictions.

The past year has been a volatile one for Norwegian Cruise Line stock. Last seen up 4.8% at $16.71, the security is bouncing off a pullback to the $15 region. The $24 level has rejected several of NCLH's rallies since November, culminating in a March 8, annual low of $14.91. Though it is now looking to snap a three-day losing streak, the equity remains down 40.3% year-over-year.

Short sellers are already running for the exits. Short interest fell 20.9% in the last two reporting periods, yet the 37.40 million shares sold short still make up 9% of NCLH's available float. Should this pessimism continue to unwind, shares could move even higher. 

An unwinding of pessimism in the options pits may put even more wind in the stock's sails. This is per NCLH's Schaeffer's put/call open interest ratio (SOIR) of 0.83, which ranks higher than 86% of readings from the last 12 months. This indicates short-term traders have rarely been more put-biased.

Options bulls are already responding to today's update. So far, 11,000 calls have been traded, which is double the intraday average, and more than double the 5,170 puts that were exchanged. Most popular is the January 2023 7.50-strike put, followed by the 5/13 18-strike call, with positions being opened at the former.  

 




 
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