Disney (DIS) – Losing it’s Magic – Aug 3rd, 2020
Bearish – DIS – $116.94
Markets took a breather this week to await the massive earnings events on Thursday evening. After AAPL, AMZN and FB reported strong numbers, markets reacted positively, but failed to break to new relative highs. This leads us to further our base case that markets will continue to consolidate unless we see a break above $327 and $270 respectively on SPY and QQQ.
DIS Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang looked at DIS and the upcoming earnings event next week. Expecting a significant decline in Theme Park, Media & Studio businesses, Disney+ provides the only bright spot, but hardly makes up for the rest. With the very poor relative performance to its sector and negative analyst revisions the past week, suggests a potential miss on earnings. Expecting DIS to guide lower on earnings, Tony is buying an Aug $115/$105 Put Vertical @ $2.90 Debit. As of Friday’s close, these calls were trading for $2.33 Debit. We are adjusting this trade to the Aug $117/$107 Put Vertical after DIS’s strong intraday rally on Friday.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience.
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