Pre-Earnings Option Bulls Target The Walt Disney Company (DIS)

Walt Disney Co (DIS) will report earnings after tomorrow's close

by Karee Venema

Published on Feb 2, 2015 at 10:30 AM
Updated on Apr 20, 2015 at 5:32 PM

Walt Disney Co (NYSE:DIS) is slated to take its turn in the earnings confessional after tomorrow's close, and ahead of the event, traders have shown a preference for calls over puts among options set to expire in three months or less. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.55 ranks lower than 94% of similar readings taken in the past year, meaning short-term speculators have rarely been as call-heavy as they are now.

It's a similar backdrop in today's trading, with calls crossing the tape at more than two times the average intraday pace. Plus, DIS' 30-day at-the-money implied volatility is up 5.9% at 23.6%, signaling elevated demand for short-term contracts. Most active is the weekly 2/6 90-strike call, where traders are buying to open the contracts with the expectation that DIS will settle north of $90 at this Friday's close -- when the series expires.

On the charts, DIS has been moving steadily higher over the past 52 weeks, tacking on 29%. More recently, though, the equity has been consolidating atop its 120-day moving average since hitting a record peak of $96.43 in mid-January. Today, Walt Disney Co (NYSE:DIS) is testing support atop this trendline -- and was last seen 0.5% lower at $90.49, despite a price-target hike to $100 from $96, and reiterated "outperform" rating at RBC -- amid a broad-market downturn.

Daily Chart of DIS Since February 2014 With 120-Day Moving Average

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