Walt Disney Co (DIS) Kicks Off New Year With New Highs

Blue-chip media stock Walt Disney Co (NYSE:DIS) is higher to start 2017, with help from the success of Rogue One and an upgrade at Evercore ISI

Jan 3, 2017 at 12:35 PM
facebook twitter linkedin

Walt Disney Co (NYSE:DIS) is starting 2017 off on a high note. The entertainment company's latest "Star Wars" installment, "Rogue One," just enjoyed its third consecutive weekend at the top of the box office, and -- similar to these three Dow peers -- the stock scored some upbeat analyst attention. Specifically, Evercore ISI said the blue chip "stands to be a significant beneficiary" of President-elect Trump's tax reform plans, upgrading the shares to "buy" from "hold" and hiking their price target to $120 from $103 -- near record-high territory. Since the new trading year began just hours ago, DIS shares managed to notch a new 12-month high of $106.90 -- to the delight of recent option buyers -- and were last seen 1.9% higher at $106.21, backing down from their 2016 high of $106.75.

From a longer-term perspective, the blue-chip media stock has been climbing higher in recent months, and is currently up more than 17% from its early October lows. What's more, the recent bullish cross of its 20-day and 200-day moving averages underscores recent strength. Despite the stock's uptrend, though, 12 of 23 analysts still rate the shares a lukewarm "hold." A round of additional upgrades could push the shares even higher.

It looks as though option players are betting on DIS to extend its recent upswing. DIS' 50-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 2.25 sits just 2 percentage points from an annual peak, indicating option buyers have been exceptionally bullish towards the blue chip in recent weeks. What's more, near-term option players are also more call-heavy than usual, with DIS' Schaeffer's put/call open interest ratio (SOIR) of 0.76 sitting in the call-skewed 19th percentile of its annual range. The two top open interest positions are the front-month January 100 and 105 calls, both of which sit in the money, indicating there isn't currently much in the way of options-related resistance in the near term.

However, not everyone is betting on DIS to continue its journey higher. DIS short interest is up 20.3% over the last reporting period, suggesting some of the recent call buying could be short sellers hedging their bets. 

Whatever their motive, near-term option buyers are getting a bargain. The stock's Schaeffer's Volatility Index (SVI) of 15% is higher than just 9% of all other readings from the past year, indicating option players are pricing in relatively low volatility expectations for Walt Disney Co (NYSE:DIS) shares right now. Meanwhile, DIS' Schaeffer's Volatility Scorecard (SVS) sits at a relatively elevated 68, indicating DIS has tended to exceed volatility expectations over the past 12 months. 

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners