RCL has several layers of technical pressure on the charts
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Royal Caribbean Cruises Ltd (NYSE:RCL) stock has been drifting lower since a July post-earnings bull gap. That peak was double RCL’s 2023 closing low, with the shares now back below their pre-earnings closing low. The $98 level was resistance in mid-September before the recent technical breakdown, and $98.86 marked double the stock’s 2022 close.
Furthermore, the security just broke below its 80-day moving average, a trendline that acted as support earlier this month. With this unfavorable technical setup in place, now looks like a good time to weigh in on the cruise stock with puts.
Higher oil prices and economic pressure could spark downgrades for the equity. In fact, 15 of the 19 analysts in coverage carry a “buy” or better rating. The stock was upgraded earlier last week but was only able to turn in one winning session from it, and quickly pared those gains in the subsequent days.
An unwinding of optimism in the options pits could provide headwinds as well, as October is very call heavy. Our recommended put option has a leverage ratio of 5.3, and will double on a 16.9% drop in the underlying shares.