June 21st- Carnival Cruise July 9, 2021/ January 21, 2022
Bull Call spread:
July 9, 2021, $29C, $1.04
January 21, 2022, $40C, $1.33
Carnival is a re-opening play. On June 24th they are holding a conference call with analysts to provide an update on their business. This could be a catalyst for the stock to move higher, if they give a demand outlook and protocols to avoid any issues with passengers contracting the virus. Below I have provided some technical analysis to further prove the risk to reward is in our favor. Carnival recently went on a nice run into the low 30's and was rejected down to the $28 range. Currently, it looks like it is finishing up its A-B-C correction and is in the final downward move of the "C". On Monday. I will be adding on if I see weakness around $27.20-28. I will be listening to the conference call to hear what they have to say.
This week, cruise stock analysts upgraded the sector, noting:
"Analyst Greg Badishkanian upgraded CCL, RCL, NCLH to outperform from peer perform, saying in a note to clients on Wednesday that early indications pointed to a strong restart for the industry.
“Our checks suggest improving booking / pricing trends out of North America over the past month, with stronger trends over the past week. While there is some lingering uncertainty surrounding the U.S. restart (CDC / Florida, etc.), we view those unknowns as largely transitory when viewed against the broader reopening backdrop,” the note said.
Bookings and demand are running ahead of pre-pandemic levels, according to Wolfe.
Cumulative 2022 bookings are now up approx. +10% to +15% versus 2019 levels with signs of improving 1Q demand (especially in January). Pricing is up in the +15% to 25% range vs. 2019 before factoring in [future cruise credits],” the note said."