Bearishness in Royal Caribbean (NYSE: RCL)

Heavy put action in Royal Caribbean Cruises Ltd. (NYSE: RCL) suggests at least one investor is bearish on the company and expects further downside in the stock throughout the next half-year.

Around 1:41 p.m. EST, one block of 15,000 September 23 puts hit the tape at the ask price of $1.20 per contract thanks to an investor who appears to be bearish on the cruise line company. It looks like the investor bought these puts expecting at least 27% of downside throughout the later-term. This put buyer will make money if RCL shares close lower than $21.80 at September options expiration.

Keep in mind that while this action expresses bearishness, the investor could be using this put purchase to hedge a long stock position. This means the investor could have bought these options to protect against a potential slide in the stock during the next six months.

The buying action we saw this afternoon has pushed implied volatility of these puts up to 48%, compared to a 30-day historical volatility of 16%. The September 23 puts are currently unchanged on the day.

The volume we saw today in RCL does not seem to have a catalyst, as the company’s latest news was an upgrade by Goldman Sachs to “neutral” from “sell.” The company’s next earnings could be sometime around April 22. RCL shares have dropped 23 cents to $30 so far today.

Remember to open a free virtual trading account to evalutate the risk/reward dynamics of this long put trade and all other options strategies.