Options Bulls Bombard Red-Hot Walt Disney Stock

DIS is set for its best day in almost 10 years

by Karee Venema

Published on Apr 12, 2019 at 10:01 AM
Updated on Apr 12, 2019 at 10:08 AM

It's a busy morning on Wall Street, and while most eyes are on a batch of blowout bank earnings, Walt Disney Co (NYSE:DIS) is making plenty of waves, too. The entertainment giant unveiled details for its highly anticipated Disney+ streaming service, which will be available in the U.S. beginning Tuesday, Nov. 12, for $6.99 per month, below rival Netflix's (NFLX) monthly fee and the $7.50 per month Wall Street was expecting.

In reaction, DIS stock has shot up 11.5% to trade at $129.98, fresh off a new record high of $130.26, and pacing for its best day since May 6, 2009, when it jumped 11.8%. This push higher has the shares extending a late-March bounce off its 80-week moving average -- located near $108 -- and on track for a third straight weekly win.

Analysts have already expressed optimism toward both Disney+ and DIS stock. Currently, nine of 10 covering brokerages maintain a "buy" or better rating, with not a single "sell" on the books.

And earlier today, J.P. Morgan Securities resumed coverage with an "overweight" rating and $137 price target -- projecting a "steep initial ramp in subscribers" -- while MoffettNathanson boosted its price target by $7 to $141. The average 12-month price target of $131.22 is a just chip-shot away from Disney's current price, though, suggesting some additional price-target hikes could come down the pike.

DIS options traders are active this morning, too. Already today, 147,000 calls and 42,000 puts have changed hands -- nine times the equity's average daily volume. The April 140 call is most active with more than 12,908 contracts traded, and it looks like new positions are being purchased here for a volume-weighted average price of $0.15. If this is the case, breakeven for the call buyers at the close next Thursday, April 18, is $140.15 (strike plus premium paid).


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