Disney shares are up more than 11 percent since the market bottomed Dec. 24, and options traders don’t seem to see any signs of slowing for the rally.
The stock rose 1 percent Monday despite the company announcing that it would raise admission prices to Disneyland ahead of the opening its brand-new, 14-acre “Star Wars” area. The shares continued their rise early into Tuesday’s trading session.
“There is no competition for Disney, so of course, when you have no competition, you do have pricing power. I’ve had to pay those high ticket prices, myself,” Mike Khouw of Optimize Advisors said Monday on CNBC’s “Options Action.” The new price hikes now place the cheapest admission ticket at more than $100 on nonpeak days.
On Monday, call options outpaced puts, with traders betting on another 5 percent rally in the near term.
The most active trade was Jan. 25 115-strike calls. Specifically, one trader bought 500 of those 115 call contracts for 70 cents each, betting that the stock could rise above $115.70 by Jan. 25.
Khouw shares a similar outlook on Disney. “We put out a bullish bet on ‘Options Action’ just over a week ago,” he noted. “But we were targeting the 120-strike.”
That trade forecast a 10 percent rally before March expiration, on the expectation that Disney will report strong earnings in February.
Disney shares have fared well amid the recent market turmoil. The stock was down just 5 percent during December while the broader S&P 500 fell more than 9 percent.
The stock was up about 1 percent Tuesday.