Royal Caribbean Cruises (RCL) PriceWatch Alert Support Down To $12.30

Posted: Thursday, April 30, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Royal Caribbean Cruises (NYSE: RCL) closed yesterday at $14.01. So far the stock has hit a 52-week low of $5.40 and 52-week high of $33.78. Royal Caribbean Cruises stock has been showing support around 12.30 and resistance in the 14.96 range. Technical indicators for the stock are Bullish and S&P gives RCL a neutral 3 STAR (out of 5) hold rating. RCL appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Jan '10 7.50 covered call (YUV AU) for a net debit in the $6.61 area. That is also the break even stock price for this trade. This covered call has a 261 day duration, provides 52.82% downside protection and a 13.46% assigned return rate for an 18.83% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the RCL Jan '10 2.50 Call (YUV AZ) and selling the Jan '10 7.50 call (YUV AU) for a $4.30 debit. The trade has a 261 day life and would provide 51.46% downside protection and a 16.28% assigned return rate for a 23.00% annualized return rate (for comparison purposes only). Royal Caribbean Cruises does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]