Why I Changed My Mind and Bought Carnival Stock
I admit, I haven't very been very bullish on cruise stocks amid the coronavirus outbreak, despite their large price declines. I happen to think cruises won't begin sailing as early as many hope, with likely delays into late 2020 or early 2021 -- and that's at the earliest. Without a vaccine, likely 18 months away, it's unclear whether cruises will be able to set sail before there is wide-scale immunity.
In addition, cruise companies aren't domiciled in the U.S. and therefore don't pay U.S. corporate taxes. That means cruises are currently disqualified from the $2.2 trillion CAREA Act stimulus that Congress passed in March. Should cruising delays drag on, that could very well mean bankruptcy. In addition, on Monday, April 13, per a new CDC "no-sail" order, all cruises suspended their operations through June, causing their stocks to fall hard yet again.
Yet I decided to actually go ahead and buy some Carnival Corporation (NYSE: CCL) stock on Monday, while also selling puts on the stock. Selling a put means that in exchange for collecting a premium now, I'm on the hook to buy 100 shares should Carnival stock fall beneath a certain strike price by a certain time.
Source Fool.com
