Options Traders Expect Another Earnings Win From Disney Stock – Schaeffers Research (press release)

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Dow component Walt Disney Company (NYSE:DIS) is slated to report earnings after the close tomorrow, Feb. 6. Perhaps due to DIS stock’s upbeat earnings reaction last quarter, options traders have been loading up on calls ahead of the event. Below, we’ll take a closer look at Disney shares, and see how speculators have been positioning themselves ahead of earnings.

On the charts, the security is up nearly 13% since dipping below the century level in early September. More recently, they’ve reversed course from the $113 area to test their 60-day moving average, while sliding past the $108.50 level — a 61.8% Fibonacci retracement of their plunge from last April’s high to the September low. DIS was last seen trading at $108.23.

Options traders, meanwhile, have been initiating long calls relative to puts at a quicker-than-usual clip in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security’s 10-day call/put volume ratio of 2.21 ranks in the elevated 92nd annual percentile.

Drilling down, the February 121 call saw the largest increase in open interest during this time frame. It looks like most of these contracts crossed near the ask price this past Friday, suggesting options traders expect the ESPN parent to rally to $121 in the coming weeks.

Looking back, DIS shares gained 2% in the session immediately following the company’s earnings release last November. This time around the options market is pricing in a larger swing of 6.2%, based on at-the-money implied volatility data.