Options Traders Jump on Streaming Stocks

Disney stock is holding its gains despite Disney+ issues

by Josh Selway

Published on Nov 12, 2019 at 2:50 PM

Walt Disney Co (NYSE:DIS) is trading higher today as its Disney+ streaming service launches, last seen up 1.4% at $138.70, even though the company said stronger-than-expected demand for the service resulted in a number of glitches for users. Either way, options volume has picked up amid the buzz, with calls crossing at three times the pace expected.

The most popular Disney option is the January 2020 150-strike call, followed by the November 140 call, which expires on Friday. New positions are opening at each, with many likely betting on more upside for DIS stock going forward. Call options were popular before the launch of the streaming service, too.

Fellow streaming stock Roku Inc (NASDAQ:ROKU) is also on the rise today, last seen up 3.9% at $134.25. This puts the shares on pace for a third straight win following last week's post-earnings bear gap. Call volume is double put volume today, running in the 95th annual percentile. Traders are opening positions at a number of near-term strikes, including the November 130, 135, and 140 calls.

Despite the increased demand, the 30-day at-the-money implied volatility for ROKU is 56.1%, and ranks in the 20th annual percentile. In other words, volatility expectations still appear low.

Finally, it's worth noting that CBS Corporation (NYSE:CBS) shares are struggling during Disney's big day, though it's from the company's own doing, not on concerns for increasing competition. Instead, traders are reacting to the company's weak third-quarter results, which were hurt by its carriage dispute with AT&T (T). Speaking of streaming, though, CBS did again mention its streaming service in the first line of its quarterly release, adding that revenue from its CBS All Access and Showtime OTT services grew 39% year-over-year.

Options volume has turned up in response, last seen at almost triple the daily average. Much of the activity occurred in one trade, where a speculator opened matching positions of 3,310 contracts at the June 2020 35-strike put and 40-strike call. CBS options, in general, have been in demand, as open interest is now at an annual high.


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