Notable Tuesday Option Activity: MAR, RCL, SCHW

Royal Caribbean (RCL) saw 26,286 option contracts trade (~2.6M underlying shares), roughly 100.9% of its one‑month average daily volume, led by 8,096 contracts on the $360 call expiring March 20, 2026 (≈809,600 shares). Charles Schwab (SCHW) recorded 53,706 option contracts (~5.4M underlying shares), about 53.3% of its one‑month average daily volume, with heavy activity in the $97 put expiring February 13, 2026 (6,238 contracts, ≈623,800 shares). The concentrated strikes and elevated volumes suggest notable speculative or hedging positioning that could influence short‑term price action and option-implied volatility for both names.

Analysis

Market structure: The block options flow—8,096 RCL $360 calls (≈809,600 shares) and 6,238 SCHW $97 puts (≈623,800 shares)—represents concentrated directional positioning equal to ~100% of RCL’s ADV and ~53% of SCHW’s ADV, which pressures hedgers (MMs) to buy/sell underlying and can mechanically amplify near-term moves. Winners: cruise operators and travel suppliers if RCL flow is genuine directional demand; Losers: broker-dealers and margin-sensitive fintech (SCHW) if put flow signals accelerating client de-risking. Cross-asset: aggressive risk-on RCL flows can push real yields +10–25bps if growth reprices; elevated sell-hedge flow in SCHW raises demand for short-term Treasury/secured funding and may lift implied equity vols.

Risk assessment: Tail risks include a travel-disrupting shock (pandemic/geo) that would collapse RCL calls and force large mark-to-market losses, or a regulatory/market-structure hit to broker-dealer economics that makes SCHW puts right tail events; both are low-prob but >3x portfolio gamma amplification near expiries. Immediate (days): gamma-hedge squeezes and price pinning into Feb/Mar expiries; short-term (weeks/months): option expiries and earnings/Fed events will resolve direction; long-term: fundamentals (cruise capacity recovery vs. brokerage margin trajectory) matter for 2–12 quarters. Hidden: block flow may be spreads or structured-product hedges—not naked directional bets—so infer position size conservatively (discount by 30–50%).

Trade implications: For RCL favor defined-risk bullish exposure—buy call-spreads into the Mar 20, 2026 cycle sized 1–2% portfolio notional to capture upside while limiting gamma. For SCHW favor defined-risk bearish exposure—buy Feb 13, 2026 $97/$85 put spreads or outright $97 puts sized 0.75–1.5% notional, and prefer spreads to limit cost if flow is transient. Pair trade: long RCL (1%) vs short SCHW (1%) to express a risk-on rotation; reduce financials overweight by ~1–2% and add travel/leisure by the same within 5 trading days.

Contrarian angles: Consensus may over-interpret single-strike concentration—if these are structured-hedge flows, underlying directional pressure will fade after dealer unwind; reaction risk is underdone on SCHW (puts reflect concentrated downside fear) and potentially overdone on RCL (big call blocks can be hedged with collars). Historical parallel: concentrated option blocks in single strikes often create 1–3 week mean-reverting squeezes once dealers neutralize gamma. Unintended consequence: aggressive short-dated hedging by dealers can cause transient but severe liquidity moves—set stops and use spreads to avoid forced deleveraging.

Key Decisions for Investors

• Establish a 1–2% portfolio notional long RCL via a Mar 20, 2026 defined-risk bull call spread (use $360 long leg or nearest 30–40 delta long leg, cap upside by selling a 1.2–1.4x higher strike) within 5 trading days; target +40–60% profit, stop loss at -30%.
• Establish a 0.75–1.5% portfolio notional bearish position in SCHW by buying Feb 13, 2026 $97/$85 put spreads (or outright $97 puts if liquidity favors) sized to limit max loss to the premium; add to position if SCHW trades below $95 on >1.5x ADV.
• Implement a dollar-neutral pair: long RCL 1% vs short SCHW 1% (equally weighted) to express a short-duration risk-on rotation; reassess after Mar 2026 expiries or after Q1 earnings, whichever is earlier.
• Reduce broad financials exposure (brokerage/fintech) by 1–2% and redeploy into travel & leisure names (e.g., RCL, CCL) by same amount over the next 2 weeks; reassess if VIX rises >20 or 10‑yr yield moves >30bps against position.
• Do not trade naked options here; require flow confirmation—only scale above initial sizes if open interest in the $360 RCL calls or $97 SCHW puts rises by >50% over 10 trading days, indicating sustained directional demand.