Disney (DIS) is hard down today (-4%), not a surprise in light of hurricane Irma setting up to devastate Florida. But is that really why DIS is down?
(Reuters) - Walt Disney Co (DIS.N) Chief Executive Bob Iger said on Thursday the company's earnings per share for this year will roughly be in line with a year ago, dragging down shares of media stocks.
So I did some digging. Disney's theme parks contribute about 30% of Disney revenues. Last year 20 million people visited The Magic Kingdom in Orlando. The fate of this theme park in right now inexorably tied to the destructive path of Irma. It's not just the effect the hurricane might have on the park, which is about 40 miles to the Atlantic coast, it's the potential for serious damage to the transportation infrastructure surrounding the park. Has that also been factored into today's 4% decline in share price?
I don't know the answer, but I do know that we are already Short DIS in the portfolio, and that the September at-the-money puts ($96.5) are selling at under $1.00. There are 8 days left on those puts and so far today the at-the-money puts from yesterday (Sep $101 puts) are up 332%. Can DIS see another 4% drop in the aftermath of Irma, and if so, what will today's at-the-money puts do? We have 8 days to find out. (For speculators only)
TRADING MODELS (Numbers mid-session Thursday)