The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

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
Using RRG To Find Best Three Stocks inside the DJ Industrials Index
next post
CVS replaces CEO as profits, share price suffer

Related Posts

Will Technology Drive S&P Higher in October?

October 6, 2024

Retail Stocks Caught in Limbo: Will RTH Break...

June 7, 2024

The One Chart to Watch as S&P 500...

May 21, 2024

Markets Surge Post-Election: Is It Time to Go...

November 7, 2024

Is It A Pullback? Or is More Downside...

May 28, 2025

Emerging Stocks to Watch – Breakouts, Momentum &...

May 21, 2025

Decode the Stock Market’s Health With This Key...

February 26, 2025

Small Caps Surge, Markets React to TSLA &...

July 28, 2024

Is It Time To SELL Your Magnificent 7...

July 13, 2024

The Best Five Sectors, #2

January 11, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


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

    Latest

    • Apple reveals complex system of App Store fees to avoid E.U. fine of 500 million euros

      June 30, 2025
    • Breakdown of NVDA’s Stock Price and S&P 500: Actionable Technical Insights

      June 30, 2025
    • Thom Tillis announces retirement from Senate after clash with Trump

      June 30, 2025
    • SCOOP: House Republican eyes bid for Thom Tillis Senate seat after Trump attack

      June 30, 2025
    • Dem delay tactic ends, debate begins on Trump’s ‘big, beautiful bill’

      June 30, 2025
    • GOP, Dem senators remain divided over Medicaid after Trump’s ‘big, beautiful bill’ vote

      June 30, 2025

    Categories

    • Business (1,272)
    • Politics (3,873)
    • Stocks (1,477)
    • Uncategorized (45)
    • World News (1,265)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, 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 thetraderharbor.com | All Rights Reserved