Carnival Lands at Top 5 Most-Active Options Amid Profit Beat, Brighter Outlook

Luzi Ann Santos wrote a column · Jun 26, 2024 00:23

$Carnival (CCL.US)$'s improving financial prospects are spurring its heaviest options volume in more than two months, landing the cruise liner at the top five most active stock options Tuesday.

The company that runs cruise lines under its namesake brand, Princess Cruises, Holland America, Cunard, AIDA Cruises and P&O Cruises, unexpectedly swung to a profit in the second quarter, raised its full year earnings guidance and reported record booking volumes for 2025 sailings.

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As of 12:08 p.m. in New York, more than 280,000 Carnival options changed hands. That put the stock's options volume just behind that of $NVIDIA (NVDA.US)$, $Tesla (TSLA.US)$, $Apple (AAPL.US)$, and $Advanced Micro Devices (AMD.US)$.

The most active Carnival contract is the call option that gives the holder the right to buy the stock at $18 by the end of the week. Volume on those calls reached more than 25,750 so far, more than triple its open interest. Demand for contract is soaring as the stock price climb near strike price, boosting the call option's intrinsic value and potentially helping keep the contract in-the-money when it expires in three days.

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The stock surged after the company raised its adjusted earnings before interest, taxes, depreciation and amortization for the full year by about $200 million to $5.83 billion as advanced bookings left less inventory for the rest of 2024, helping the company increase prices. That surpassed the $5.7 billion expected by analysts, according to Bloomberg.

For the fiscal second quarter ended May 31, the company surprised the market with adjusted earnings of 11 cents per share, swinging from a 31-cent loss for the same period last year. Analysts polled by Capital IQ were expecting a loss of 2 cents per share.

"We closed yet another quarter delivering records, this time across revenues, operating income, customer deposits and booking levels, exceeding our guidance on every measure," Carnival Chief Executive Officer Josh Weinstein said in the company's press release Tuesday. "Based on continued strong demand trends, we are taking up our expectations for the year with net yields now forecasted to top 10 percent and propelling us towards double-digit returns on invested capital."

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Carnival stock's 8% surge to $17.69 is spurring early warning signals. Eleven of the 15 technical indicators tracked by moomoo are flashing signs that the shares could be overbought, and the trend could be trending bearish. Only the moving average convergence-divergence technical chart is bullish.

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