Both Walt Disney (DIS) and Kroger (KR) are showing signs of putting in a bottom as Wall Street has become more optimistic about consumer spending. I am recommending we roll our calls out three weeks and to higher strike prices to capture more potential appreciation.
Note that Disney is expected to report earnings on Nov. 8. We will purchase a protective put to hedge the position prior to the announcement.
As I said in the previous alert on Kroger, uncertainty surrounding the company’s planned acquisition of competitor Albertsons could weigh on shares. We are rolling our call to get closer to our cost basis. But we may close the position at a loss to avoid the ups and downs likely to be seen in the coming months due to regulatory scrutiny.
DIS Oct Week Four (10/28) 100 Call
Current Stock Price: $106
Cost Basis: $127.19
- Buy to close the DIS Oct Week Four (10/28) 100 Call for around $6
- Sell to open the DIS Nov Monthly (11/18) 105 Call for around $5.30
- Set your initial debit limit at $0.70, but adjust as needed to roll today
New Cost Basis: $127.89
KR Oct Week Four (10/28) 43.50 Call
Current Stock Price: $45.95
Cost Basis: $51.63
- Buy to close the KR Oct Week Four (10/28) 43.50 Call for around $2.45
- Sell to open the KR Nov Monthly (11/18) 46 Call for around $1.28
- Set initial debit limit at $1.17 but adjust as needed to roll today
New Cost Basis: $52.80