Luxury Cruise Stock Upgraded on Strong Bookings

Options bulls are blasting the equity today

Digital Content Manager
Sep 20, 2022 at 10:36 AM
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Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) is up 2.4% to trade at $15.69 at last check, after Truist Securities upgraded the equity to "buy" from "hold," and hiked its price target to $19 from $18. The analyst in coverage praised the company's significant increase in bookings, which grew 30% in the last three weeks of August and first week of September, amid easing pandemic-related restrictions. Plus, the firm noted Norwegian is set benefit from strength in luxury cruises.

The brokerage bunch was skeptical of NCLH coming into today, with six of 10 analysts in coverage calling it a tepid "hold." Plus, the 37.48 million shares sold short still make up 9% of the stock's available float, despite short interest falling 12.7% in the last two reporting periods. This leaves plenty of room for additional upgrades and a potential short squeeze.

The security has been chopping higher on the charts since hitting a June 16, two-year low of $10.31. The 40-day moving average emerged as a level of support in in early August, and has contained a handful of the stock's pullbacks since. Year-to-date, though, NCLH remains down 25.6%.

An unwinding of pessimism in the options pits could give the shares a boost. This is per NCLH's Schaeffer's put/call open interest ratio (SOIR) of 1.60, which ranks higher than 94% of annual readings. This means short-term options traders have rarely been more put-biased. 

It looks as though that shift may already be in motion, too. So far today, 43,000 calls and 14,000 puts have been traded, or nine times the average intraday volume. Most popular is the weekly 9/30 17-strike call, followed by the weekly 10/7 17.50-strike call, with new positions being opened at both.


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