The Wonderful World of Disney

When I think of Disney I think of pure perfection.  

Disney World in Orlando is just done so well.  Everything is pristine, perfect, and not a hair out of place.  

It truly is the Magic Kingdom.

I am sure it isn’t easy to create that feeling and keep it up over all the fourteen theme parks, hotels, cruise lines and everything else Disney, with over 200,000 employees.

There are people that are pure Disney fanatics, I know two of them.  You too can become a member, financing starts at $355 per month with a ten year loan and 10% down at 15.1% APR.

That’s a little too much Disney for me.  

We did visit when Grant was seven.  My fondest memory of the trip was when we were standing across the water from the Expedition Everest roller coaster and one of the kids asked, “Why is everyone screaming?”

Obviously, we did not take an Everest Expedition.

Looking at the DIS stock chart you can see how it has traded up $15 over the last eight trading days.  We can also see that the implied volatility of the options, 33.84, is considerably lower than the stock’s historical volatility of 51.12.

This sets up for a good buying opportunity of options.  One of my favorite strategies for finding cheap options to purchase is when the options volatility is priced less than where the stock volatility is trading.

Since I think DIS is ready for a pullback I would like to buy put options in the Feb19 expiration cycle, which is 51 days away.

I like buying the Feb19 165 puts with an implied vol of 35.78.  To reduce my cost and bring down my initial outlay for the position, I like selling the Feb19 150 puts at a 40.27 implied volatility.

The volatility difference between these two options also tells me this is a good purchase.

I am buying the Feb19 165/150 put spread paying $2.08.  That is a great value for a $15 spread with 51 days to go.

I will cut my losses if the spread trades below $1.25 or about 40% of my initial dollar outlay.

Disney World is a must visit for kids AND adults.

Thanks for reading…See You Next Tuesday!

Licia Leslie


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