We temporarily exited our Walt Disney (DIS) position to avoid earnings risk. The company reported quarterly results after the bell on Wednesday that fell short of analyst expectations. However, Disney’s parks, experience and consumer products business generated a better-than-expected operating profit of $1.76 billion as travel recovers.
Perhaps most impressive, though, was the fact that Disney added 7.9 million subscribers in the first three months of the year to bring its global total to 137.7 million. This was above expectations of 134.4 million and particularly surprising given Netflix’s (NFLX) subscriber losses this year.
The stock initially sold off on the miss, as well as cautious comments from management about the tough economic environment. However, shares are bouncing back today with the broader market.
I view DIS as a bargain at current levels given the success of its parks and streaming service. We will continue to generate income from the stock by selling a put.
You can enter today’s trade even if you were not in the previous one. Just be aware that we will be tracking and managing it based on the ongoing position.
Current Stock Price: $107.49
Net Debit: $17.21
Action: Sell to open the DIS May Week Four (5/27) 103 Put for around $1.48, but adjust as needed to sell a put today
New Net Debit: $15.73