Could Disney's (DIS) upside magic roll on another month?


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Walt Disney Co. (NYSE: DIS ) shares could have more room to run during the next month, and might event experience further upside after its next earnings announcement, according to one investor who was willing to commit more capital to roll out a bullish long call position.

Between 10:33 a.m. EST and 10:52 a.m. EST, roughly 5,700 July 32 calls changed hands versus current open interest of 4,800 contracts and the same number of August 32 calls crossed the tape versus current open interest of 323 contracts. The front-month options changed hands for roughly 78 cents per contract and the August 32 calls traded for around $1.62 per contract, and a look at time and sales suggests an investor could have sold to close the nearer-term calls to buy to open the back-month options. The investor paid 84 cents per roll, and will make money if DIS shares are trading higher than $32.84 at August options expiration (this represents roughly 2% of upside during the next 44 days until these calls expire). It looks like the investor also tied a stock position to this call roll, but this article focuses only on the call volume on the tape that suggests the investor expects DIS shares to continue to climb slightly ahead of August options expiration.

DIS is scheduled to announce earnings figures on Aug. 10, just one week prior to August options expiration. It's interesting that the investor who rolled out this front-month long call position is convinced the stock could continue to the upside after the company's earnings report (analysts estimate earnings of 58 cents per share). In fact, it is possible they want exposure to this earnings event and that's why they are extending their call bet. DIS gained 55 cents, or nearly 2%, to $32.27 during morning trading.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Options

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Karla Yeh

Karla Yeh

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