Walt Disney Stock Uptrend Draws Massive Batch of Options Bulls

Walt Disney options traders are targeting a move to levels not seen since August 2015

Apr 4, 2017 at 11:29 AM
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Shares of Walt Disney Co (NYSE:DIS) have been charging higher since bottoming near $90 in mid-October, up more than 25% at $113.31, and fresh off a March 31 annual high of $113.71. Options traders don't expect Disney stock to slow its roll, either. In the last 10 weeks, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 150,534 calls on DIS, compared to 90,644 puts. In fact, with 552,892 calls currently outstanding, call open interest is in the 89th annual percentile.

This trend toward DIS calls is especially evident among the short-term crowd. Disney's Schaeffer's put/call open interest ratio (SOIR) of 0.46 indicates calls more than double puts among options set to expire in three months or less. While this reading hit a nearly 10-year low of 0.36 on March 20 -- according to Schaeffer's Quantitative Analyst Chris Prybal -- the current reading is docked in the 6th percentile of its annual range. Simply stated, near-term traders are more call-skewed than usual toward DIS stock.

Drilling down, calls in the front three-months series account for seven of DIS' top 10 open interest positions. Among front-month April options, the 110, 115, and 120 strike are the most heavily populated, where 89,632 contracts collectively reside. While data points to mostly buy-to-open activity at the in-the-money 110 strike, the 115 and 120 calls have seen a mix of long and short activity. While those initiating new bullish bets expect DIS to extend its recent rally through expiration at the close on Friday, April 21, those selling to open the positions expect the strikes to serve as short-term ceilings.

dis stock open interest front 3 months options

Elsewhere, DIS' top two open interest position are the June and October 120 calls, with a respective 69,048 and 51,190 contracts outstanding. Buy-to-open activity has been detected at both strikes, meaning options traders expect DIS to surge to fresh highs over the next several months. A move above $120 would bring DIS stock within striking distance of its August 2015 record high at $122.08.

The optimism toward DIS is seen outside of the options pits, too. Though short interest is up 12.3% from its mid-February multi-year low, these bearish bets still account for a low 1.2% of DIS stock's available float. Plus, 65% of analysts covering Walt Disney Co (NYSE:DIS) maintain a "buy" or better rating, 
 

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