EOT Trade Alert – December 11, 2012

| December 11, 2012

December 11, 2012

Trade Alert:

  Buy DIS April 2013 $50 Calls at $2.40 or better

Company Background:

Walt Disney (DIS) is a media conglomerate with theme parks, television, movies, and merchandise licensing.

Short-Term Catalyst:

This Mickey Mouse operation is anything but kids play.

DIS has significantly outperformed the market with a 37% rise in share price over the last year.  With a performance like that, the company that created “the happiest place on earth” has done an excellent job making their shareholders happy as well.

More importantly, the stock should continue to be one of the best performing large cap stocks going forward.

Put simply, DIS is a media juggernaut.

Their theme parks are the best in the world.  They continue to rake in profits and plan to expand their presence in China with another theme park opening in 2016.

DIS’s television assets include broadcast network ABC as well as some of the most popular cable networks like ESPN, The Disney Channel, and ABC Family.  And their studio film unit is comprised of Walt Disney, Miramax, and Touchstone.

What’s more, they recently added Lucasfilm and the Star Wars franchise.  This acquisition should create a windfall of new profits similar to previous purchases of Marvel Entertainment and Pixar.

And to top it off, DIS is a merchandise marketing genius.

What’s more, the stock is in a solid uptrend.

Management scared off some investors with their revenue and earnings estimates last quarter.  But after a quick 6% decline, DIS has come racing back.

Let’s buy call options on DIS as investors bid up the price of DIS in the weeks ahead.

Trade Details:

Underlying Stock Symbol: DIS
Current Bid-Ask Price: $2.29 – $2.32
Option “Buy Up To” Price: $2.40
Break-Even On Stock At Expiration: $52.40
Maximum Risk Per Contract: $240


Exit Strategy:

DIS is trading at $49.71 per share.  Resistance levels will be at $52.50 and again at $55.00.  Remember, we want this stock to move higher.  Support levels will be at $47.00 and $46.00.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

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