Paper bought 2,500 BAX Aug 67.5 Puts for $2.75 (3.7 times usual volume) with stock at $68.01
Paper bought 9,424 DNDN Aug 5 Puts for $1.38 (2.6 times usual volume) with stock at $4.59
Paper bought 500 DLR May 65 Puts for $0.20 (2.5 times usual volume) with stock at $68.90
Paper bought 2,500 RRD Sep 11 Puts for $0.70 (3.8 times usual volume) with stock at $12.37
Paper bought 776 CNSL May 15 Puts for $0.10 (12.8 times usual volume) with stock at $17.71
Paper bought 5,000 TSLA Jun 40 Calls for $20.70 (2.2 times usual volume) with stock at $60.65
Paper bought 5,996 LVLT Dec 28 Calls for $1.29 (3.8 times usual) with stock at $23.13
Paper bought 1,000 REN Jun 7.5 Calls for $2.35 (7.1 times usual volume) with stock at $9.64
Paper bought 900 SKH Oct 7.5 Calls for $0.70 (4 times usual volume) with stock at $6.31
Paper bought 1,774 CS May 30 Calls for $0.35 (3.1 times usual volume) with stock at $29.33
Paper bought 5,000 TSLA Jun 40 Calls for $20.70 (2.2 times usual volume) with stock at $60.65Paper bought 2,500 BAX Aug 67.5 Puts for $2.75 (3.7 times usual volume) with stock at $68.01
Paper sold 3,949 DIS May 67.5 Calls for $0.63 (2.5 times usual volume) with stock at $65.34
Paper bought 9,424 DNDN Aug 5 Puts for $1.38 (2.6 times usual volume) with stock at $4.59
Paper bought 5,996 LVLT Dec 28 Calls for $1.29 (3.8 times usual) with stock at $23.13
Disney’s stock is trading at record highs following the apparent success of Iron Man 3, the latest in their line of superhero films produced in the wake of their $4 billion acquisition of Marvel Entertainment. Prior to the success of films such as Iron Man and The Avengers, there had been concern that Disney had overpaid. These concerns have seemingly been all but addressed. The film’s ability to maintain high attendance remains to be seen, though prior films in the series have done exceptionally well.
From a broader perspective, Disney has, through action films and the continued success of ESPN, addressed a longstanding demographic problem that had plagued their stock value since the mid 1990’s. Described as Disney’s “Boy Problem”, the success of tween idols such as Miley Cyrus and the like produced a certain feminine image that made their output undesirable to male consumers. Analysts point to Iron Man as the final nail in the coffin of the skewed Disney output of the past.
The profits from Iron Man will not, however, be included in the earnings to be announced this afternoon. A number of analysts seem hesitant to throw their full weight behind Disney in the short term, and show concern that the outlook for Q2 earnings may be tempered by excitement about this film’s success, and that the bar may be set too high. Disney is also not without its potential pitfalls. Analysts will be looking closely at ad revenue from ESPN and will closely scrutinize the behavior of Hulu, which is partially owned by Disney, to determine whether or not it can remain competitive. Disney appears to be a good long-term bet, but one wonders whether some of the bull sentiment that has emerged in the past several weeks may be jumping the gun.
Brady Randall
Bradyr@keeneonthemarket.com
Early this morning we saw a large block trade in LVLT. Paper sold 19,735 Sep 29 Puts to buy 19,735 Sep 24-29 Call Spreads for a total debit of $0.55. This was a huge position, nearly 70 times average daily option volume in this name. The stock was trading at $22.48 when this trade took place, and the stock has already seen a rally. This trade involves selling puts to fund the purchase of the call spreads. The short put component of this trade is extremely risky. With that in mind I want to look at a trade that gets me long the stock without a huge risk component.
Trade:
Buying the LVLT Sep 25-29-33 Call Fly for $0.50
Risk: $50 per 1 lot
Reward: $350 per 1 lot
Breakevens: $25.50 and $32.50