Royal Caribbean Fed The Bears, But Bullish Option Traders Bought The Dip

Royal Caribbean Group RCL gapped down almost 5% Monday morning amid overall market weakness. The stock has traded in a steep downtrend since June 2 when it rejected a resistance level near the $98 mark.

On Saturday, a three-judge panel of the 11th U.S. Circuit Court of Appeals made a last-minute decision to approve an appeal, filed by the CDC, to lift pandemic restrictions on Florida-based cruise lines. Florida has seen a rapid increase in the spread of the COVID-19 Delta variant and over the last two weeks, The state accounted for 20% of new virus cases despite only 6.5% of the U.S. population residing there.

On Monday, Royal Caribbean’s stock fell into a support zone at the $67 level and bounced. Options traders think the bottom is in for the stock and purchased over $ of bullish call contracts. All of the bullish trades, besides two, had a strike price of $70 expiring on Sept. 17.

See Also: Why Carnival And Norwegian Cruise Line Shares Traded Lower Today

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 or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of 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.

The RCL Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:45 a.m., a trader executed a call sweep near the ask of 250 Royal Caribbean options with a strike price of $90 expiring on Jan. 21, 2022. The trade represented a $67,500 bullish bet for which the trader paid $2.70 per option contract.
• At 10:37 a.m., a trader executed a call sweep near ask of 968 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $473,352 bullish bet for which the trader paid $4.89 per option contract.
• At 10:38 a.m., a trader executed a call sweep above ask of 562 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $289,430 bullish bet for which the trader paid $5.15 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 799 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $410,686 bullish bet for which the trader paid $5.14 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 559 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $291,798 bullish bet for which the trader paid $5.22 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 518 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $574,540 bullish bet for which the trader paid $5.25 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 366 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $193,980 bullish bet for which the trader paid $5.30 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 643 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $340,790 bullish bet for which the trader paid $5.30 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the midpoint of 354 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $189,390 bullish bet for which the trader paid $5.35 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 550 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $294,250 bullish bet for which the trader paid $5.35 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 312 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $166,920 bullish bet for which the trader paid $5.35 per option contract.
• At 10:38 a.m., a trader executed a call sweep near the ask of 330 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $176,550 bullish bet for which the trader paid $5.35 per option contract.
• At 10:41 a.m., a trader executed a call sweep near the ask of 316 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $170,640 bullish bet for which the trader paid $5.40 per option contract.
• At 10:41 a.m., a trader executed a call sweep near the ask of 3780 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $2.07 million bullish bet for which the trader paid $5.50 per option contract.
• At 10:43 a.m., a trader executed a call sweep near the midpoint of 412 Royal Caribbean options with a strike price of $70 expiring on July 30. The trade represented a $108,768 bullish bet for which the trader paid $2.64 per option contract.
• At 11:19 a.m., a trader executed a call sweep near the ask of 1005 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $555,765 bullish bet for which the trader paid $5.53 per option contract.
• At 11:20 a.m., a trader executed a call sweep near the ask of 551 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $309,662 bullish bet for which the trader paid $5.62 per option contract.
• At 11:20 a.m., a trader executed a call sweep near the ask of 251 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $143,823 bullish bet for which the trader paid $5.65 per option contract.
• At 11:20 a.m., a trader executed a call sweep near the ask of 251 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $143,823 bullish bet for which the trader paid $5.73 per option contract.
• At 11:23 a.m., a trader executed a call sweep near the ask of 252 Royal Caribbean options with a strike price of $70 expiring on Sept. 17. The trade represented a $139,860 bullish bet for which the trader paid $5.55 per option contract.

RCL Price Action: Shares of Royal Caribbean traded down 4.7% to $69.92 at publication time.