Ready for another great week of options trading?
Here’s this week’s pick…
What goes down must, well, produce something going up—besides the nervous system of people trading the market.
The stock in question: Royal Caribbean (NYSE:RCL).
Cruising is hot. Capacity expansion will goose revenues in 2016 and beyond, as well as new ports of call.
Bunker fuel prices are way down.
And both millennials and boomers like fixed-cost, celebratory travel.
Of the three major lines that are publicly held (the other two are Carnival and Norwegian), Royal Caribbean is the best to trade calls against.
If you the buy the shares for $91.70 or so on a down day when the stock is holding up, and you sell the December monthly 92.50 call, you should collect $1.60 in premium.
If you get called out, that is $1.90 in a week.
Do it 52 times a year and your annualized rate of return is more than 100%.
Think about it.
Michael Shulman owns RCL shares.