Stocks vs. Options: Which generates better returns?
Plug in your stock idea to find options trades offering a potentially better ROI.
NEW TO OPTIONS?
Visit our New to Options page to learn more.
Find out more »
Midday option trade alert: Royal Caribbean put buying
Related Symbols: RCL
Options action in Royal Caribbean Cruises Ltd. (NYSE: RCL) suggests at least one investor is protecting against a potential later-term slide in the cruise company’s stock.
At 11:40 a.m. EST, an investor bought 20,000 June 25 puts around the ask price of $1.05 per contract. Investors who bought these puts are calling for at least 18% of downside by June options expiration, and will make money if RCL shares close lower than $23.95. The buying action that crossed the tape this morning has expanded implied volatility to roughly 44%, compared to a 30-day historical volatility of 42%. These out-of-the-money puts have dropped eight cents so far on the day, and are home to current open interest of 1,000 contracts. This indicates investors most likely traded these puts to open.
While this long put position is bearish, this investor could also be long stock and hedging that position by buying up these options. This is why this options trade could be a protective play.
It’s important to visualize the risk/reward dynamics of any trade, and option investors can evaluate this bearish long put strategy by opening a virtual trading account today.
RCL did not announce any news this morning, but Goldman Sachs upgraded the company to neutral from sell yesterday morning. RCL has not announced its next earnings release date, but the market expects the report sometime arond April 22.
Higher returns with less capital. It’s called leverage and options have it—stocks don’t. Learn more:
Two Traders, One Strategy Steve and Jared take a look at risk management strategies on the OH platform.
Navigating OptionsHouse Get to know the OH platform and all the tools you have at your disposal.
Enter a stock ticker
What price would the stock have to rise to or drop to for you to admit you’re wrong and put off your trade?
Enter price you think the stock will move to. You can be bullish or bearish.
How many days do you think it will take the stock to hit your target price?
