How To Earn 12% Yield While Waiting to Buy RCL 30% Cheaper
At about $281.56 a share, Royal Caribbean (RCL) is trading about 23% below its 52W high.
Do you think RCL stock is a good long-term bet at current levels? What about at a 30% discount at about $200 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
12% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 3/19/2027, with a strike price of $200
- Collect roughly $1,560 in premium per contract (each contract represents 100 shares)
- That’s about 7.5% annualized yield on the $20,000 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 11.5%
- And you give yourself a chance to buy RCL stock at deep discounted price of $200
However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| RCL stays above $200 | You keep the full $1,560 premium – 7.8% extra income over the next 379 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| RCL closes below $200 | You’ll be obligated to buy 100 shares at $200. But thanks to $1,560 premium, your effective cost basis is just $184.4 per share – a roughly 35% discount from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
First, you want fundamentals to check out. For details, see Buy or Sell RCL Stock or check Royal Caribbean Investment Highlights
Second, you want to better understand competitive advantage and industry tailwinds.
Why Hold RCL Stock Long-Term
Royal Caribbean is a strong brand in an industry with significant secular tailwinds. The company’s focus on innovation and enhancing the customer experience through new ships and private destinations positions it well for long-term growth. The increasing demand from younger generations and the high repeat business from loyal customers provide a durable revenue stream. While the balance sheet has a notable debt level, the company is generating positive free cash flow and is actively deleveraging. An economic downturn could present a buying opportunity for a long-term compounder.
Competitive Advantage
We classify RCL’s economic moat as NARROW, with the primary source being Brand
- Royal Caribbean has demonstrated pricing power with bookings for 2025 and 2026 at higher rates, indicating strong consumer demand and a willingness to pay for their vacation experiences.
- The company has a strong brand reputation for quality and innovation, and was named to Fortune’s World’s Most Admired Companies list in 2026.
- Royal Caribbean’s loyalty program, the Crown & Anchor Society, offers various perks that incentivize repeat bookings, creating a sticky customer base.
- The company is actively investing in new ships and private destinations, such as the upcoming Royal Beach Club on Paradise Island and Perfect Day Mexico, to enhance its value proposition and attract both new and repeat customers.
See Royal Caribbean Full Analysis.
Industry Tailwind
The industry tailwind is STRONG, with CAGR projection of 9.1% – 12.2% (Multiple sources including Vertex AI Search, The Business Research Company, and Allied Market Research through 2030-2033)
Secular Trend: Increasing consumer preference for experiential travel, particularly among younger demographics like Millennials and Gen Z who are showing a growing interest in cruising.
Key Risks: Potential for economic downturns impacting discretionary spending on leisure travel and geopolitical events disrupting travel itineraries.
Financial Guardrails
Cash Generation: Positive Free Cash Flow
Balance Sheet: Royal Caribbean has a high net debt to equity ratio, but its debt is well covered by operating cash flow, and the company has been actively paying down debt.
If you are not comfortable with options or stock-specific trades, Portfolios are the way to go as they can protect and grow wealth even better.
The Right Way To Invest Is Through Portfolios
Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks.
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