On Thursday, the shares of Walt Disney (NYSE:DIS) experienced a decline of 3.9%, leading to the closure of the stock at a level that hasn’t been witnessed in almost nine years. A notable portion of investors is now anticipating a further decrease in stock price over the coming months.
Investors holding Disney stocks are closely analyzing the company’s proposed strategies for a turnaround. This comes after CEO Bob Iger unveiled plans earlier this month, outlining a combination of price increases across the streaming platforms, an uptick in advertisements, and cost reduction measures, all aimed at reviving the company’s performance.
During the same day, Disney’s options market exhibited higher activity than usual. Around 321,000 contracts were traded, representing 1.4 times the average daily trading volume. Within this increased activity, a predominant portion of trading showcased bearish inclinations. Many investors opted for put options, which provide a safeguard against the stock falling below $80 within the time frame of mid-September to mid-October. These put options emerged as some of the most actively traded contracts.
Put options grant the holder the right to sell shares at a predetermined price in the future. The decline in Disney’s stock was also influenced by the broader market’s weakness, as investors adopted a cautious stance ahead of the upcoming speech by U.S. Federal Reserve Chair Jerome Powell later in the week.
In Disney’s earnings report released on August 9th, Bob Iger acknowledged the existence of a “challenging environment” for the entertainment company in the short term. Since that time, the company’s shares have witnessed a decline of over 5%.
The closing price of Disney’s stock stood at $82.47, marking the lowest point since October 16, 2014.
Featured Image: Megapixl
