When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (DIS) – BUY
BUY the Walt Disney Corp (DIS) October 2021 $165-$175 in-the-money vertical BULL CALL spread at $8.80 or best
Opening Trade
9-13-2021
expiration date: October 15, 2021
Portfolio weighting: 10%
Number of Contracts = 11 contracts
If you don’t do options, buy the stock outright.
Walt Disney (DIS) shares have suffered a 13%, or $25 dive in the spring thanks to the surge in the delta variant from which now it is only just starting to recover.
I believe that delta peaked two weeks ago and has begun a precipitous decline. That sets up a second reopening trade and (DIS) will lead the charge.
The parks are currently operating at only 50% capacity. When delta dies, earnings will surge. The company also has a string of streaming blockbusters still in the can, which it is holding back for more profitable theatrical release. The summer blockbuster Black Widow is a prime example.
This gives us a rare entry point to get into one of the most powerful brand franchises on the planet. Disney’s own streaming service has been a runaway success, allowing them to take a generous share of the Netflix and Amazon businesses.
Disney is spending a staggering $31 billion on new content this year. The parks will soon be packed to the gills, as will the hotels. They already launch so many blockbuster movies that they have to be rationed awards at the Oscars. That leaves only the cruise line to make a comeback.
It really is a company that will soon be firing on all cylinders.
I am therefore buying the Walt Disney Corp (DIS) October 2021 $165-$175 in-the-money vertical BULL CALL spread at $8.80 or best.
Don’t pay any more than $9.30 or the risk/reward will turn against you.
This is in keeping with my recent strategy of only taking on very deep in-the-money, very short dates positions. This is the only way to work with a stock market that has doubled in 18 months.
This is a bet that Walt Disney shares will not fall below the $175.00 strike price by the October 15 options expiration date in 24 days.
Here are the specific trades you need to execute this position:
Buy 11 October 2021 (DIS) $165 calls at………….………$21.00
Sell short 11 October 2021 (DIS) $175 calls at………….$12.20
Net Cost:……………………..…….….....……..………….….....$8.80
Potential Profit: $10.00 - $8.80 = $1.20
(11 X 100 X $1.20) = $1,320 or 13.63% in 24 trading days.
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
