Norwegian Cruise Line (NCLH): Selling Puts After a Major Stock Price Decline

During their recent episode of the Value Options Letter and Acquirers Podcast, Travis and Carlisle discussed Norwegian Cruise Line (NCLH): Selling Puts After a Major Stock Price Decline. Here’s an excerpt from the episode:

So Norwegian Cruise Lines. This is a company that I like a lot. I like the industry.

I think that cruises are a very affordable option for travel nowadays for families. Norwegian is, I would say, a little bit of the black sheep in terms of stock returns. Their returns are struggling a little bit relative to Royal Caribbean and Carnival.

And so the stock had a rough quarter in the first quarter and just kind of some rough guidance. And so the stock traded down to about $16.14. It had been in the 20s. So what we did was we took a very conservative tact.

Once again, we sold a $10 put, folks, for December, and we collected a $0.69 premium. There was 212 days to expiration. So on this one, we’re targeting 9.6%. So once again, not heroic by any means, but keep in mind, this stock was at 16 and it traded most of the year in the 20s or high teens. We’re selling the 10. And the stock rallied and we were able to close it 83 days into the trade. We had made most of the profit.

We had made 62 of the potential $69. So 29.3% return or almost 7% on the net cash required. And once again, if you’re a subscriber and you want to do 10 of these contracts, do it.

We just, for simplicity’s sake, we just show one option of any price stock. So there’s Norwegian. Good one.