Looking for SHORT Positions.

The cruise industry is in trouble since last year and COVID. I am still looking for a decaying company. I found a few. The German TUI promised the best for a spread trade. 

I am still planning to buy AAPL but 2 x CALL 18th JUNE, $140 Strike, seeing what the EARNINGS report will bring on Wednesday, expectation are Apple will do its first 100 billion dollar Revenue report ever, good. Then I want to hold it for a month or two months and sell it. 

Meanwhile for a Hedge Fund Manger, you have to go short to balance your portfolio. So we will go short in the Cruise Industry, especially since CCL, NCLH and RCL came out that they will abandon ALL cruises until MAY 21 and some even until OCT. German TUI was about to go under due to lot of debt, leverage expenses and operating costs. I abandoned the idea since Germany gave them 4.8 billion EUR to cover their operating costs for 2 years. They also managed to negotiate long term debt. Thus, they will be fine if nothing big happens. But in the image below they would have overshot the top by a lot.

Viking Cruise was another one. But they dont have options available and you have to short the stock itself. No big deal. But my view is their stock is casting along and loosing 3-5 dollars in 6 months. Even though the ratio between Apple and Viking is widening fast, see the red line. Their debt burden is increasing and revenue is shrinking fast.

RCL at the blue bottom is only trading at around half of Apple stock price. 

The black line is Apple vs the Norwegian cruise line. Not to bad. Increasing divergence 3 to 4 fold! The thing is NCLH has a modern fleet that is not too big and hence has less maintenance and operating costs.  

Here is another view of the same performance graph of the same stocks vs Apple.

CCL is edging on Viking and NCLH is coming in third.

Here we have the two final candidates. I eliminated VIKING since that stock only dropped 3 Dollars in 5 months. My trade would be 100 shares short at $15.80 with a potential gain of 1.5 Dollar in 2 months.

That would be around a 10%. Thus I leave this one out.

Now we come to CCL. Since they seized operation for the next 3-4 months, they are selling their weakest ships and the upper management sold some stocks. There will be a reduction in assets and revenue. I think this stock can still fall 4 Dollar.

Buy 3 x PUT 16th JULY, $22.50 Strike @ 5.25 = $1575 A drop by $4.00 by the end of March would make a $600 profit or 38%. I like that, even half of it. Stop will run as a trailing stop at 2.50

In remarks to Apple, we discussed this in a previous blog. As pointed out I expect AAPL to gain $5.00 on Wednesday and and a break of the 139 level and then going full steam ahead. Plus $13.00 by end of March?
2 x 18th Jun $140.00 Call @ $13.50 = $2,700. Potential win at 14 Dollars = 1,000, ROI = 37%. Like that. Trailing Stop at $4.00

Thats it for now on Sunday Morning at 1:30 am