As the cruise industry popped the corks at the annual Cruise Shipping Miami conference and celebrated CLIA’s 35th anniversary and a bright future, Royal Caribbean International Chairman and CEO Richard D. Fain had his own reasons for a celebration – having exercised a fat lot of share options and then sold them.

Royal Caribbean Int'l HQ in Miami, Fla.

According to an SEC filing, Fain exercised his options on 297,000 shares at $9.90 apiece, and sold them for in between $ 30.795 to $30.85, for a net take of about $6.18 million.

Three other RCL Board members – Thomas Pritzker, William K. Reilly, and Laura Laviada, also exercised options for 20,000 shares and sold them.

It’s no crime to exercise the share options you have in your own company and then sell them - that’s what they’re for. Besides, Fain still has plenty of shares left – 1.38 million, to be precise.

But the timing does have some significance. RCL shares (NYSE:RCL) have been climbing steadily month-on-month since a Feb 2009 low of $6, and currently stands at $31.11.

After a sustained bull run in the middle of the worst recession since the Great Depression, when your CEO and members of the Board start offloading shares at the same time, the first question that springs to mind – Is RCL’s bull run over? If so, is it the cruise industry or just RCL?

RCL’s main competitor Carnival Corp. has also enjoyed the same bull run. Carnival shares (NYSE:CCL) have gone up from $19.50 in Feb 2009 to $37.66 as of now. Carnival saw record bookings in Jan and Feb, leading to a recently announced price hike.

The cruise industry in general too looks pretty optimistic. In 2010, CLIA members will carry 14 million passengers (up from 13.5 million in 2009) and introduce 12 new ships for a total investment of $6.5 billion. Between 2010 and 2012, 26 new ships representing $15 billion are in the pipeline.

After the huge publicity blitz and successful launch of Oasis of the Seas as the world’s largest cruise ship, RCL couldn’t be happier. And perhaps that’s the point. With sister-ship Allure of the Seas lined up for launch in December, it doesn’t seem possible that RCL could top the kind of media attention and customer interest generated by Oasis. 

Doesn’t mean that RCL is going to tank, but the $30 target set for RCL shares by analysts has already been breached, and its own chairman and CEO saw this as the best time to cash in. This would also explain some unusual patterns in option activity for RCL, and why some bears are piling on board RCL, betting that RCL will coast into April expiration below the $28 level.

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