Monday, April 26, 2010

Royal Caribbean (RCL) - Put Spreader into Earnings

RCL is trading 37.18 with IV30™ on the rise into earnings Wednesday (4-28-2010 BMO). The LIVEVOL™ Pro Summary is below.

The company has traded over 43,000 options in the first hour on total daily average option volume of just 9,476. All but 330 contracts have been puts. The largest trade has been a Jun 25/33 put spread purchase (buy 33 puts) 20,000 times paying $0.95. The Stats Tab and Day's biggest trades snapshots are included (click either image to enlarge).

The Options Tab (click to enlarge) illustrates that the 33 puts are opening and the 25 puts are trading the same size as OI. I checked - the 25 puts were long interest so the sales today are a close.

The Skew Tab snap (click to enlarge) illustrates where on the skew curve the spread was done.

Finally, the Charts Tab (12 months) is below (click to enlarge) for just the stock price (vol charty omitted)

You can see the recent climb in RCL. My best guess would have been that this is a long shareholder hedging - this covers 2,000,000 shares to the downside. But - I only see a single shareholder with 1.4 million shares, and no one else all the way down to 316,000 shares.

20,000 spreads for $0.95 is a $1,900,000 purchase.

This is trade analysis, not a recommendation.

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