Disney has lost "powerhouse" status amid the coronavirus pandemic
Entertainment and theme park mogul Walt Disney Co (NYSE:DIS) has stepped back from its normal "powerhouse" status amid the coronavirus pandemic, forced to close all theme parks across the globe and halt production on films and television series. This drop-off has triggered the security to fall back below its $200 billion market cap and break below its 1,000-day moving average. DIS hit a five-year low of $79.07 on March 18 and has now shed 24% year-to-date, making it an ideal time to bet on the stock’s next leg lower.
There is plenty of analyst optimism still circling, with 10 of 18 covering firms sporting a "buy" or better recommendation. If this heightened optimism were to unwind, it could mean an even larger setback for Walt Disney stock in the near future.
After reporting less-than-stellar earnings last week, Disney’s implied volatility (IV) continues to fall. IV’s are now priced in the 20th percentile of annual range, or stated another way, IV’s on DIS have been higher 80% of the time over the past year. Lastly, our recommended put has a leverage ratio of negative 6.6 and will double on a 12.9% drop in the underlying stock.
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