Media conglomerate The Walt Disney Company (DIS) hit a new 52-week low last week. One trader sees shares declining further over the next month.
That’s based on the September 29 $75 puts. With 32 days until expiration, 10,330 contracts traded compared to a prior open interest of 134, for a 77-fold rise in volume on the trade. The buyer of the puts paid $0.55 to make the bearish bet.
Disney stock dropped to about $82.50 last week, so the stock would need to lose another $7.50, or another 9 percent, for the option to move in-the-money. Shares are also now down about 30 percent from their 52-week high over $118.
The media company has had poor box office performance in recent months, as well as lower-than-expected theme park attendance weighing on revenues. Without a turnaround in those segments, shares may languish for some time.
Action to take: Shares may have some more downside in the days ahead. Long-term investors may want to look to start buying on a drop under $80, with an eye towards adding on further drops. The company’s intellectual properties will likely increase in value over time.
For traders, the short-term trend is down. That plays well with the September $75 puts. While they may not move in-the-money, they could likely see mid-to-high double-digit growth in the coming weeks.
Disclosure: The author of this article has a position in the company mentioned here, but does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.