Disney’s recent quarterly earnings report spurred volatility in $DIS shares, exceeding analysts’ projections. Notably, its entertainment streaming services, Disney+ and Hulu, marked their maiden profitable quarter.
These services, excluding ESPN+, experienced a 13% revenue increase to $5.64 billion, with a combined operating income of $47 million, contrasting starkly with a $587 million loss a year ago. Including ESPN+, the streaming services recorded an $18 million loss, an improvement from the $659 million loss previously.
This profitability surge owes to a surge in subscribers and increased average revenue per user. Disney+ gained over 6 million core subscribers, totaling 117 million worldwide, while Hulu saw a 1% subscriber increase to 50 million. Conversely, ESPN+ witnessed a 2% subscriber decline, ending the quarter at 25 million.
Despite a net loss of $20 million (1 cent per share), a significant deviation from the $1.3 billion (70 cents per share) gain a year prior, Disney’s adjusted earnings per share of $1.21 surpassed expectations of $1.10. Revenue slightly missed estimates at $22.08 billion compared to an anticipated $22.11 billion.
Disney attributed its robust revenue growth to its U.S. parks, cruises, and other experiences, which surged 7% to $5.96 billion. Meanwhile, international resorts and cruises saw a 29% increase to $1.52 billion, largely fueled by heightened attendance and pricing at Hong Kong Disneyland.
CEO Bob Iger noted, “Our results were driven… by our Experiences segment as well as our streaming business.” He emphasized the profitability of entertainment streaming in the quarter and expressed confidence in achieving overall streaming business profitability by Q4.
Also, a collapse of cinema film revenue led to a 40% plunge in revenue from box-office sales, licensing, and related businesses, totaling just $1.39 billion this quarter.
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CFU TRADING STRATEGY ON DISNEY
Trading Neutral
Unlock the power of options trading to capitalize on any market sentiment or projected direction and pave your path to substantial profits. Today, we’re diving into a top-tier strategy tailored for sideways markets — the Iron Condor.
Understanding the Iron Condor Strategy
At its core, an iron condor is a multi-legged options strategy that involves simultaneously selling an out-of-the-money (OTM) call spread and an OTM put spread on the same underlying asset with the same expiration date. This results in a net credit, which is the maximum profit potential of the trade. The goal of an iron condor is to profit from low volatility and sideways price movement, with defined risk and capped potential losses.
Step-by-Step Guide to Trading an Iron Condor
Step 1: Selecting the Underlying Asset
Choose an underlying asset you believe will trade sideways for the foreseeable future.
Step 2: Determine the Strike Prices and Expiration Date
Identify a range within which you expect the price of the underlying asset to remain throughout the duration of the trade. Select strike prices for the call and put spreads that are outside this range to maximize the probability of success. Typically, traders look for options expiring in 30 to 60 days to take advantage of time decay.
Step 3: Selling the Call Spread
Sell an OTM call option while simultaneously buying a further OTM call option to create a call credit spread. This establishes your upper zone. Try to select resistance zones for the upside.
Step 4: Selling the Put Spread
Sell an OTM put option and buy a further OTM put option to form a put credit spread. This establishes your lower profit zone. Try to select support zones for the downside.
Step 5: Managing Risk
Calculate the maximum loss and margin requirement for the trade. Implement risk management techniques such as setting stop-loss orders or adjusting the position if the underlying asset moves significantly using rolling techniques.
Step 6: Monitor and Adjust
Regularly monitor the performance of the iron condor and adjust the position if necessary. This may involve rolling the spreads, closing out one side of the trade, or closing the entire position to lock in profits or limit losses.
Here is an Iron Condor I would trade on $DIS
I believe DIS will trade at essentially the same level by July 19, and they don’t report earnings again until August 6.
So let’s wrap this at 100 / 110 while keeping the position fully hedged.
Caution: this is just a trade IDEA and not a recommendation and is only used for illustrative purposes.
DIS Price Prediction for July 19: 105.53
– This is based on the seasonal trends on how Disney performs during this time period. With 67% confidence
BTO DIS 071924 95 PUT
STO DIS 071924 100 PUT
STO DIS 071924 110 CALL
BTO DIS 071924 115 CALL
Limit 1.35 Credit
Max profit: $135 / contract
Max loss: $365 / contract
The position favors a slight bearish bias because DIS is slowly predicted to favor the downside through the Summer.
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