IB Options Brief: Walt Disney Co. (DIS)

Options Unusual Activity

IB Options Brief: Walt Disney Co. (DIS)

Posted May 4th, 2012 by Caitlin Duffy in Unusual Activity

Disney Options In Play Ahead Of Earnings

DIS - Walt Disney Co.
Light front-month call buying in Disney this morning suggests some traders may be positioning for shares in the name to rally following the Companyís second-quarter earnings report on Tuesday of next week. Shares in the operator of the Happiest Place on Earth are down 2.0% at $42.92, joining in on the broad market decline on the heels of todayís jobs report.

Traders picking up the May $43, $44 and $45 strike calls may see the value of their positions increase prior to expiration should Disneyís earnings beat expectations and send the price of the underlying higher. The most active DIS contracts at present are the Oct. $47 strike calls, with 5,000 lots changing hands in the first half of the session against open interest of 1,178 positions. It looks like most of the calls were sold for a premium of $1.17 each.

The trader or traders responsible for the call sale keep the full amount of premium as long as shares in Disney fail to rally above $47.00 by October expiration. Strategists may be long the stock and selling covered calls, however, if these are naked short calls, sellers of the options face unbridled losses above a breakeven share price of $48.17.

----------------------------------------------------------------------------------------

Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained from theuse of this information. Past performance is not necessarily indicativeof future results.

This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this material arenot suitable for all investors. Any opinions expressed herein are givenin good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take into accountyour particular investment objectives, financial situations or needsand is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particular circumstancesand, as necessary, seek professional advice.