Friday the market was disappointing to most retail traders. After an incredibly strong bounce after hot CPI numbers, the market opened up lower than ripped higher and looked as if it could continue. Only to dash the hopes of traders looking for a rally and fall hard on Friday and retrace half of the move it made Thursday.
While inflation and the Fed Monetary policy remains front and center for the driving narrative of this market as demonstrated on Thursday, we are now in the full swing of earnings seasons. Here are a list of names reporting this week.
That said, one name that stood out to me from their unusual options activity around their approaching earnings announcement is WALT DISNEY (NYSE:DIS). DIS is one of the later names to report as they aren’t until November 8th. However, despite the down market on Friday they had some strong call buying for the November Monthly $105 calls.
DIS has now bounce twice off the $90 price level and on the daily is now holding up above $94 which is a key area of support. We think it’s possible for price to move back up to the 8 or even the 21 EMA on the weekly chart and those are at $102 and $107 respectively.
Of course if price were to fail here and fall below this key level of support at $94 that is where this idea would be wrong from so it’s a good risk/reward at this level for a potential move of 10$ to the upside with a downside stop of 1$. Another idea would be to wait for the price to break the key psychological level of $100 in order to get involved. Regardless, those call options from Friday are for almost 2 million dollars and they are out of the money meaning they’ll expire worthless if the price doesn’t move higher from here.
Other companies in Walt Disney’s space includes: Roku (NASDAQ:ROKU), Cinemark Hldgs (NYSE:CNK), LiveOne (NASDAQ:LVO), Reading Intl (NASDAQ:RDI) and AMC Entertainment (NYSE:AMC).