DIS Analysis

The Walt Disney Co. (DIS)

Update 5/11/2017: DIS fell after earnings were published and then moved into a sideways correction. I exited at 18.7% of maximum potential profit.

Shares declined by 1.9% over two days, or a -339% annual rate. The options position produced a 23.1% yield ond ebit for a +4,206% annual rate.

DIS publishes earnings on Tuesday after the closing bell.

I shall use the series of weekly options that trade for the last time 10 days hence, on May 19.

Implied volatility stands at 19%, which is 1.9 times the VIX, a measure of the volatility of the S&P 500 index.

DIS’s IV stands in the 52nd percentile of its annual range and the 76th percentile of its most recent broad movement.

The price used for analysis was $11186.

Premium: $2.99 Expire OTM  
DIS-iron fly Strike Odds Delta
Long 118.00 91.1% 10
Break-even 114.99
Short 112.00 52.0% 50
Short 112.00 47.9% 50
Break-even 108.99
Long 106.00 89.0% 10

The premium is 50% of the width of the position’s wings.

The risk/reward ratio is 1:1.

Decision for My Account

I have entered a position on DIS as described above. The stock at the time of entry was priced at $111.85.

By Tim Bovee, Portland, Oregon, May 9, 2017

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