Disney Stock Higher After Sweetening Fox Bid

DIS stock is pacing for its best month since 2015

Managing Editor
Jun 20, 2018 at 10:46 AM
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Shares of Walt Disney Co (NYSE:DIS) are up 1.4% at $107.62 in early trading, after the company announced its revised bid for Twenty-First Century Fox (FOXA) assets. Disney sweetened its offer to compete with Comcast (CMCSA), and Fox said it will postpone today's scheduled special meeting of stockholders to evaluate the new bid.

Disney stock started June below the century mark, but has since surged 8.3%. In fact, DIS shares are pacing for their best month since October 2015.

Analysts, however, have been uneasy towards DIS, with eight of 13 following the stock sporting tepid "hold" ratings. Earlier this week, the shares were slammed by a new  "sell" rating, as the analysts expressed concern about the aforementioned bidding war.

Echoing this pessimistic outlook, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 1.12, ranking in the 70th percentile of its annual range. This suggests that Disney puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

Regardless, now may be a good time to target near-term Disney options. Disney stock's Schaeffer's Volatility Index (SVI) is just 20%, ranking in the 25th percentile of its annual range -- meaning there are lower-than-normal volatility expectations priced into short-term options at the moment. 

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