Unusual Options Activity: The Walt Disney Company (DIS)

Shares of media giant The Walt Disney Company (DIS) have sunk to a 52-week low near $80 per share. One trader sees the potential for a rebound in the weeks ahead.

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  • That’s based on the November 3 $82 calls. With 32 days until expiration, 13,519 contracts traded compared to a prior open interest of 463, for a 29-fold rise in volume on the trade. The buyer of the calls paid $2.05 to make the bullish bet.

    With Disney stock going for $80, a rise to $82 would be about a 2.5 percent increase. That still leaves shares well under their 52-week high of $118.18.

    The company has struggled with slow subscriber streaming growth in the past year, as well as lower attendance at parks and cruises.

    That’s taken the stock to 64 times current earnings, but that’s expected to moderate to about 15 times earnings as the company refocuses on its profit margins.

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  • Action to take: Shares appear to be trying to form a bottom here around $80. If that can hold, the stock is positioned to head higher over time. Disney is in the process of reinstating its dividend, which it cut during the pandemic.

    For traders, the November calls are a reasonably-positioned rebound play after the current market weakness. Traders can likely nab a quick mid-double-digit gain in the coming weeks.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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