Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.
Have a stock YOU want us to review? Email my team here. – Mark
Hey Traders,
I preface this by saying the last time I was in a Disney (Ticker: DIS) theme park was 2010 …
Like a dummy I took my 7-year-old on The Matterhorn. I figured he played hockey, so how bad could it be?
Let’s just say he didn’t appreciate the surprise of the Scary Snowman as we climbed up The Matterhorn.
Oh my.
For the most part I did not engage much with Disney after that.
Not because of the snowman, but because parents always die in Disney movies, I finally realized.
So I figured I would stick to The Crocodile Hunter. You know how that turned out. It’s hard to win sometimes! (Maybe that’s just the flu talking.)
Bob Iger came back to Disney to get the Mouse House back on track.
Since then the change in volatility has been nothing short of amazing.
Is it because of Big Bob back on the beat?
Bob Got Back on Nov. 20
To be honest, his initial return did not do much for the long-term vol, but there was a nice pop in the stock.
Disney was dealing with content issues and, after the initial good vibration rally in the stock, IV long-term stayed pretty constant and was really captive to the inflation story into the end of 2022.
DIS one-year chart with 180 day IV on the bottom
DIS rallied with the market in December and January – until the reality of the situation hit home on the last earnings call. Folks were fleeing DIS streaming services.
Note above that the sharp markdown in the stock did nothing to move the needle for long-term, 180-day IV.
Also note when IV collapses, traders think the big upside move (not just a downside move) is less likely to happen in the near term..
I figure Bob Iger will right the ship since he is the ultimate technocrat.
Implied volatility is at two-year lows in the long term
If you believe in the DIS magic, long-term call options are at a bargain basement price.
