Wednesday 4 November 2015

DIS - hyper reversal ahead of earnings

Along with the broader market, Disney (DIS) opened a little higher, with a new cycle high of $116.83, but then saw a fierce downside snap, settling -2.0% @ $113.24. The excuse for the reversal is highly arguable, but regardless, the daily MACD cycle is set to turn negative this Thursday or Friday.


DIS, daily



DIS, monthly



Summary

*there was a notable bearish option trade in DIS this morning, which might have contributed to the 10am hour snap...

Puts, Nov' 105s 10,000 @ $0.50      = $0.5 million
Puts, Nov' 100s, 10,000 @ $0.25    = $0.25 million

(all entry prices approx).

Roughly.. it seems someone spent the better part of $0.75 million on a rather significant put spread.

The fact the purchase were front month options - with just 12 days left on the detonator clock, is suggestive it was an individual trade, rather than a large institution trying to hedge.
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Best guess... DIS to fall (at min). to 108/105 by late Friday... not least if the main market settles the week in the sp'2060/50s.

If sp'2020s, DIS could test the giant $100 psy' level.. before resuming higher into year end.
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To be absolutely clear... I am VERY bullish DIS.. not least because of its Marvel/Star Wars movie/TV franchises.

yours.. not short via 20,000 DIS put contracts (if only)