ROYAL CARIBBEAN CRUISES: Obstacle Cruise

Can We Steer The Titanic?

Executive Summary

• To cruise or not to cruise, so many questions.

• Is an implied volatility reading of one hundred too high?

• Royal Caribbean Cruises has moderate acquisition, bankruptcy, and shareholder dilution risks.

• Let’s fly into the weekend on an Iron Condor.

1. Why Do I Care Right Now?

Why would I care about historically healthy tourism businesses facing bankruptcy? Multi-year mobility bans followed by sudden cost-of-debt raises; if you cannot weather the storm, maybe you shouldn’t be cruising. Let’s save the sarcasm for another Rant Around section. Easier to skip, and we can continue healing that way.

We have a more tangible measure at hand. The implied volatility of Royal Caribbean Group (RCL) stands at hundred percent. Hence, we could rephrase the question as to why not everybody is selling volatility at a hundred percent. The lazy answer would be: volatility is too high. Options trading can be confusing.

In the MacroDoζer world, leaving a hundred on the table compares to a teenage …