Sport Investors League
  • Politics
  • Stocks
  • Investing
  • Business

Sport Investors League

  • Politics
  • Stocks
  • Investing
  • Business
Stocks

Disney Stock Options Strategy: A Detailed Guide to Boost Your Earnings

by admin October 19, 2024
October 19, 2024
Disney Stock Options Strategy: A Detailed Guide to Boost Your Earnings

Walt Disney Co. (DIS) has struggled as a business over the past few years and isn’t on many investors’ radars these days. However, Disney seems to have turned a corner last quarter and is positioned for a resurgence in its core theme parks and streaming businesses.

With consumer spending in the travel sector remaining robust, demand for Disney’s theme parks is increasing. Additionally, Disney+ is on track to become profitable by Q4, and the inclusion of ESPN could further enhance Disney’s edge in the streaming space. These factors provide upside potential for Disney’s stock price, particularly as the company recovers from recent challenges and realigns its strategic focus.

Disney’s stock price has recently broken above its trading range, pulled back, and bounced off its $92 support level (see chart below). This suggests there is momentum to target $102 to the upside and $113 as an extended target to the upside.

FIGURE 1. DISNEY’S STOCK PRICE HAS THE POTENTIAL TO MOVE HIGHER. An improving relative performance and moving average convergence/divergence support a potential higher price move in Disney.Chart source: StockCharts.com. For educational purpose.

With the relative performance of DIS to the S&P 500 ($SPX) improving and the moving average convergence/divergence (MACD) showing signs of strengthening, this confirms the upside potential as DIS potentially breaks out above its $97.50 resistance.

Disney stock appears modestly undervalued, trading at 18x forward earnings, slightly below the industry average. Its expected earnings per share (EPS) growth of 14.5% aligns with the industry average, while its revenue growth forecast of 4% aligns with its peers. However, Disney’s net margins of 5% surpass the industry average of 3%, indicating a stronger outlook on profitability, especially with anticipated improvements from its streaming business and sustained demand in its theme parks.

Options on DIS are expensive, with the IV rank at 67%. So, to capitalize on a potential major breakout for DIS, I suggest buying a December $95/$110 call vertical for $5.09 debit.


A call vertical involves buying a call option and selling another with a higher strike price. The two options have the same expiration date.


FIGURE 2. CALL VERTICAL ANALYSIS. Here, you see the cost of the trade, the risk curve, and the risk/reward tradeoff of the call vertical for DIS. Image source: OptionsPlay.

This structure allows an offset for the relatively expensive Dec $95 call options and reduces the overall risk by selling the $110 calls. This structure entails:

  • Buying the Dec 20 $95 Call @ $6.25
  • Selling the Dec 20 $110 Call @ $1.16

 This call vertical spread allows for a maximum reward of $991 per contract if DIS is above $110 at expiration, with a maximum risk of $509 if DIS is below $95 at expiration.

0
FacebookTwitterGoogle +Pinterest
previous post
A Strong Week: Stocks, Gold, and Crypto’s Robust Performance
next post
Tech 5: TSMC, ASML Post Quarterly Results; Amazon, Google Sign Nuclear Power Deals

Related Posts

Meme Stock Frenzy Back In the Spotlight: Are...

May 15, 2024

Why the S&P 500 Won’t Break 6000 (Yet)

October 26, 2024

Nvidia Breaks the 50-day SMA – Is this...

July 26, 2024

Gilead’s Game-Changer: What You Need to Know About...

June 22, 2024

Election Season: Keep Calm and Optimize Your Portfolio

October 26, 2024

Why Now Might Be the Best Time to...

December 24, 2024

These Sectors are Showing Strength as S&P 500...

May 22, 2024

How to Trade Gaps Up (and Down) After...

October 26, 2024

The Future of Options Trading: Real-Time Technical &...

October 26, 2024

Hedging the S&P All-Time Highs With Options

May 24, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent

    • Clusters of Long Winning Streaks: What They’re Telling Us

      June 6, 2025
    • Three Charts Showing Proper Moving Average Alignment

      June 6, 2025
    • Biden only hand-signed one pardon during final spree, and it was his most controversial one

      June 6, 2025
    • GOP bill takes aim at Congress’ ‘no rules apply’ emergency spending

      June 6, 2025
    • White House highlights Pelosi hypocrisy after Schiff demands Trump admin financial, ethics docs

      June 6, 2025

    Categories

    • Business (969)
    • Investing (2,330)
    • Politics (2,883)
    • Stocks (1,056)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: sportinvestorsleague.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 sportinvestorsleague.com | All Rights Reserved