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Options Traders Expect Huge Moves in The Walt Disney (DIS) Stock

Zacks Equity Research
Updated
PEBO vs. FIBK: Which Stock Is the Better Value Option?

Investors in The Walt Disney Company DIS need to pay close attention to the stock based on moves in the options market lately. That is because the Mar 23, 2018 $75.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for The Walt Disney shares, but what is the fundamental picture for the company? Currently, The Walt Disney is a Zacks Rank #3 (Hold) in the Media Conglomerates industry that ranks in the Top 37% of our Zacks Industry Rank. Over the last 60 days, four analysts have increased their earnings estimates for the current quarter, while one has dropped their estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from $1.960 per share to $1.68 in that period.

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Given the way analysts feel about The Walt Disney right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options? 

Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the NFLX earnings report completely free. See it here: Bartosiak: Trading Netflix's (NFLX) Earnings with Options or check out the embedded video below for more details:

 


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The Walt Disney Company (DIS) : Free Stock Analysis Report
 
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Zacks Investment Research