Covered Calls on Walt Disney (DIS)
Walt Disney (DIS) is a recent addition to my “forever hold” category. DIS stock really is the entertainment play for the next hundred years, and it will be driven by its purchases of Pixar, Marvel and Lucasfilm. It is so well-diversified, it makes so much darn money, has amazing cash flow and tons of cash on hand …Disney can’t be beat.
DIS stock trades at $84.45. The July 25 $85 calls sell for $1.09, which is a 1.3% return or 15.6% annualized. Including the appreciation, you’re looking at 1.9% returns, or 23% annualized.
Because DIS stock can experience large moves, I would only sell calls against half the position.
As of this writing, Lawrence Meyers was long DIS and DTV. He is president of Asymmetrical Media Strategies, a crisis PR firm, and PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at firstname.lastname@example.org and follow his tweets at @ichabodscranium.