Norwegian Cruise Lines Stock Options Traders Are Bullish On Pent-Up Travel Demand

Norwegian Cruise Line Holdings Ltd NCLH stock gapped up Monday, opening at $29.40, 6.16% higher than Thursday’s close.

While tech stocks skyrocketed over the course of the pandemic due to the digitalization of business operations, work from home orders and a forced consumer shift to online shopping, travel sector stocks are only starting to rebound. 

With COVID-19 vaccinations ramping up, the U.S. government is beginning to lift some travel restrictions, and on Monday Norwegian Cruise Line submitted its reopening strategy to the Centers for Disease Control and Prevention.

Norwegian Cruise Line said it would require proof of full vaccination of all guests and crew and has asked the CDC for permission to set sail on July 4.

Norwegian Cruise Line option traders may be betting the CDC will grant permission and that revenue may begin pouring in for the cruise line this summer due to pent-up travel demand. 

The Norwegian Cruise Line Trades: At 9:48 a.m. Monday, a trader executed a call sweep of 250 Norwegian Cruise Line options with a $35 strike price expiring on Sept. 17. The trade represented a $80,000 bullish bet for which the trader paid $3.20 per option contract.

At 9:48 a.m., a trader executed a call sweep of 1033 Norwegian Cruise Line options with a $26.50 strike price expiring on April 16. The trade represented a $346,100 bullish bet for which the trader paid $3.35 per option contract.

At 9:49 a.m., a trader executed a call block of 400 Norwegian Cruise Line options with a $30 strike price expiring on May 21. The trade represented a $109,600 bullish bet for which the trader paid $2.74 per option contract.

The traders are cumulatively betting over $535,700 that the share price of Norwegian Cruise Line is going higher.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price.

A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

NCLH Price Action: Shares of Norwegian Cruise Line were trading up 7.47% at $29.77 at last check.