We’ve opened a bullish trade on Walt Disney (DIS). DIS has been a long-term success story on Wall Street and, after a negative reaction to the company’s last earnings announcement, the stock is resuming its previous bullish uptrend. In fact, as of last week, the stock has broken back up into the gap that formed on Aug. 5. We anticipate that DIS is going to continue climbing on its way to eventually filling this gap.
DIS is scheduled to release its next quarterly earnings on Nov. 5, after the market closes, and we expect this announcement to be far more bullish than the last one. At the last announcement, DIS spooked investors with a candid disclosure of concerns over the potential of declining ESPN revenues as subscriber numbers have declined as more consumers are cutting the cord with cable.
However, ESPN is still a money-making powerhouse as the leader in live programming (most people want to watch sports live while they are content to record their favorite shows and watch them later while skipping through commercials), which enables the company to charge top-dollar for advertising. Coupled with the layoffs and streamlining that is expected to cut costs for the company, these higher ad rates should go a long way toward pushing revenues higher.
With the strong pre-release numbers for DIS’s new Star Wars movie and a rebound in consumer confidence and spending at the company’s theme parks, we expect DIS to provide solid returns as the market maintains its bullish attitude.
‘Buy to open’ the DIS December 120 Calls (DIS151218C00120000) for a maximum price of $1.80.
As is typical for us, we don’t often use stop losses or give targets for the options we trade, but we’ll use the underlying technical analysis for DIS to tell us when it’s time to get out.
You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.
By the way, we instructed our SlingShot Trader members to take profits in the Netflix (NFLX) calls we opened last week. We took about 72% on the trade as NFLX closed its gap. Being careful about getting too much exposure to the upside by taking profits early is probably going to be a good idea as the market absorbs the economic news due through this week.
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InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.
