Walt Disney’s Put Options Exhibit Unusual Activity

Disney Stock

Unusual options activity in Walt Disney’s (NYSE:DIS) put options has drawn attention. Disney had four put options with unusual activity, including one with a volume of 12,831, representing 18.30 times the open interest, giving it the seventh-highest Vol/OI ratio of the day. The other three options had Vol/OI ratios higher than 3.0x.

While reports have indicated CEO Bob Iger’s struggles, long-term investments sometimes start as underperformers before turning around. Nelson Peltz, one of Disney’s largest shareholders with over $2.5 billion invested in the company, is seeking seats on the board to oversee the company’s turnaround efforts.

For investors, the options market provides a way to make small bets on struggling stocks like Disney. Four put options from a recent trading session are considered, including two with the top 100 highest Vol/OI ratios.

The options discussed include the Jan. 19, 2024, $120 strike and the Jan. 19, 2024, $160 strike, both of which are in the money and offer opportunities to generate income while reducing the purchase price of Disney shares. The $120 put had a premium income of $3,495 for an annualized yield of 322%.

The other two put options mentioned are the Jan. 19, 2024 $105 strike and the Jan. 17, 2025 $125 strike, which offer different risk-reward profiles depending on the investor’s outlook on Disney.

Disney put options will continue to see unusual activity as investors weigh the success or failure of Disney’s turnaround efforts under Bob Iger.

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