Carnival (CCL)

Jan 7, 2021Trade Ideas

Cruise stocks were some of the biggest losers of the pandemic.

However, with new CDC guidelines, many could see smoother sailing ahead. In fact, companies like Carnival (CCL) just have to abide by the agency’s “Framework for Conditional Sailing Order.” That includes having procedures for testing, quarantining, and isolating passengers and crew. They’ll have to conduct mock voyages with volunteers playing passengers who get sick, too.

At the moment, most of the cruise lines haven’t done that just yet. Until they do, they can’t leave port. But it’s a positive sign the industry can eventually get back on its feet. Plus, there’s a good deal of pent up demand from folks that want to cruise, too.

Over the last few weeks, shares of CCL ran from a low of $12 to a high of $24.38. It’s now consolidating at $21. From here, we’d like to see CCL retest its prior high, near-term. Longer-term, we’d like to see it refill its bearish gap around $45.

To profit from a potential move higher, you can buy the stock at market prices. And, or you can buy to open the CCL April 16, 2021 20 calls at market. At the same time, you can hedge for potential downside to be safe with the CCL April 16, 2021 17.50 put.

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