What to Expect from Walt Disney Stock After Earnings

Options activity is ramping up ahead of the event

Deputy Editor
May 11, 2022 at 2:13 PM
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Blue chip Walt Disney Co (NYSE:DIS) stock is down 1% at $106.57 this afternoon, just ahead of the release of the entertainment powerhouse's fiscal second-quarter results. As Walt Disney steps into the earnings confessional after the close today, Wall Street is anticipating earnings of $1.20 per share on revenue of $2.25 billion, with plenty of anticipation surrounding the performance of streaming service Disney+ following Netflix's (NFLX) recent retreat.

Digging into Walt Disney stock's recent post-earnings history, the share have closed higher the day after reporting in four of the last eight quarters. This includes a 3.3% pop after its last post-earnings reaction on Feb. 10. Looking back eight quarters, DIS averaged a next-day move of 3.3%, regardless of direction. This time around, the options market is pricing in a much larger 13.8% move for tomorrow's trading. 

Options traders are blasting the equity ahead of the event. The 97,000 calls and 74,000 puts that have been traded so far today equates to volume that's nearly double the intraday average. The most activity is taking place at the weekly 5/13 120-strike call, followed by the 115 call in the standard May series, while new positions are being bought to open at each.

Calls have outpaced puts over the last 10 weeks as well, but put traders are growing bolder. DIS' 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands in the 100th percentile of its annual range. This indicates that while calls have been picked up more than puts, there's been a healthier-than-usual appetite for bearish bets of late.

On the charts, Walt Disney stock has scored seven-straight weekly losses, and is heading for its eighth unless an upbeat earnings report can right the ship. Pressure from the 10-day moving average has pushed the shares lower since early April, and DIS now sports a 31% year-to-date deficit. It's worth noting, however, that the stock sits firmly in "oversold" territory, indicating that a short-term bounce might already be in the cards. This is per its 14-day Relative Strength index (RSI) of 24. 

DIS Chart May 11

 

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