Carnival Corp. (NYSE: CCL - option chain) shares are headed higher today after the company posted a first-quarter profit of $260 million, or 33 cents per share, beating analysts' projections of 19 cents per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CCL.CCL opened this morning at $23.01. So far today the stock has hit a low of $22.98 and a high of $24.94. As of 11:40, CCL is trading at $23.65, up 34 cents (1.5%). The chart for CCL looks bearish and S&P gives CCL a negative 2 STARS (out of 5) sell ranking.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just four months as long as CCL is above $15 at July expiration. Carnival would have to fall by more than 36% before we would start to lose money. Learn more about this type of trade here.
CCL hasn't been below $14.85 at all in the past year and has shown support around $21 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CCL.
CCL hasn't been below $14.85 at all in the past year and has shown support around $21 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CCL.
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