By Mike Yamamoto of OptionMonster
NEW YORK -- Traders are looking for a rebound in beaten-down Carnival (CCL) by early next year.
OptionMonster's tracking systems detected heavy buying in the January 34.50 calls, which saw nearly 8,000 contracts trade for 65 cents to 73 cents Tuesday afternoon. These are clearly new positions, as the volume was well above the strike's previous open interest of 1,542 contracts.
These long calls lock in the price where traders can buy the stock through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $34.50.
Carnival's shares fell 1.46% on Tuesday to close at $31.72. The cruise-line operator gapped down from above $37 after reporting earnings and lowering guidance on Sept. 24 but has been trying to find support around the $32 level in recent days.
Total option volume in the name topped 14,700 contracts Tuesday, nearly triple its daily average for the last month. Overall calls eclipsed puts by more than 4 to 1.
Yamamoto has no positions in CCL.