• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Disney Stock Options Strategy: A Detailed Guide to Boost Your Earnings
Stock

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

by October 18, 2024
by October 18, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

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 @ $6.25Selling 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.

You Might Also Like
  • GNG TV: Enough Leadership for Bull Market After October Lows?
  • Mastering GoNoGo Charting: Scanning Securities on StockCharts.com
  • Revisiting the 1987 Stock Market and Fishhoks
  • Top Ten Charts for August: Two Bearish Turnaround Plays
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Interactive Brokers Expands Crypto Services in 2024
next post
Universal’s Epic Universe theme park set to open in May 2025

You may also like

The Bottom is Here or Rapidly Approaching

April 13, 2025

Financial Upswing: Understanding the Stock Market Rally and Yield Rise

November 22, 2024

Friday’s 20% Gain Has This Stock’s Short Sellers Running For...

January 22, 2023

Master Market Entry with This RSI Strategy!

April 11, 2024

Breakaway Gaps: Scanning for High-Probability Trading Opportunities

May 3, 2023

MEM TV: Can the Markets Continue Higher on Low Inflation...

July 15, 2023

Week Ahead: NIFTY Set To Stay In A Defined Range...

July 5, 2025

Quantum Computing: Top Stocks You Should Watch Now!

January 17, 2025

Top Five Charts of 2023 #1: S&P 500

December 18, 2023

Your Money And You: This Investment Strategy May Very Well...

January 21, 2024

    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.

    Recent Posts

    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025
    • How I Triple My Returns With 3x Leveraged ETFs!

      July 10, 2025
    • Want Faster, Lower Risk Trades? Use This Setup

      July 9, 2025
    • The Seasonality Trend Driving XLK and XLI to New Highs

      July 9, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,576 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,449 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,169)
    • Investing (538)
    • Stock (2,661)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025
    • How I Triple My Returns With 3x Leveraged ETFs!

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,169)
    • Investing (538)
    • Stock (2,661)

    Disclaimer: RoundTableThoughts.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 © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Week Ahead: RRG Indicates Sector Shifts;...

    April 26, 2025

    Textbook Double Top on Silver (SLV)

    May 31, 2024

    Welcome to the Tom and Jerry...

    May 8, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here