$DIS Options Intelligence

🎯 BUY DIS DEC 19 104/108 PUT SPREAD

I recommend this put spread because the term structure shows December options are underpriced relative to historical volatility, and the stock is slightly below its 20-day and 50-day moving averages, suggesting a cautious near-term outlook. The current market IV for December 19 is about 21.4% (clean IV ~19.6%), which is below the 90-day baseline volatility of 23.6%, signaling a buying opportunity for options premium. Additionally, the stock is trading at $105.56, just under key resistance levels (50-day MA at $109.85, 200-day MA at $109.66), and the RSI is neutral at 44.95, indicating no strong momentum either way. The put-call volume ratio is low (0.26), showing bullish sentiment, but the recent increase in institutional buying and analysts' moderate buy consensus with a $134 target suggest some downside hedging might be prudent ahead of the next earnings on February 4, 2026, which is well beyond this expiration.

Buy DIS Dec 19 104/108 Put Spread
Stock Price: $105.56 | Entry: Approx. $2.51 debit (based on market data for similar spreads)

📊 Trade Metrics

• Max Risk: $2.51 x 100 = $251 per spread
• Max Reward: $4.00 - $2.51 = $1.49 x 100 = $149 per spread
• Breakeven at Expiry: $108 - $2.51 = $105.49
• Win Probability: Moderate, given delta of puts near 0.30-0.40 range
• Days to Expiration: 14 (Dec 19)

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 23.6%
• Dec 19 Clean IV: ~19.6% (under baseline, BUY signal)
• Market IV: 21.4% (slightly elevated but still below baseline)
• Earnings Multiplier: 3.01x (high, but earnings are after expiration, so no event premium here)
• Calendar Opportunity: Yes, as near-term IV is lower than longer-term (Jan/Feb), favoring buying premium in December

📈 Greeks & Volatility

• Net Delta: Negative (bearish put spread)
• Theta: Slightly negative (time decay hurts long puts, but limited by short put)
• Vega: Positive (benefits if volatility rises)
• Current IV Rank: 100% (overall high IV environment, but Dec 19 IV is low relative to baseline)
• Put/Call Volume Ratio: 0.26 (bullish sentiment, so this spread acts as downside hedge)

🎯 Why This Trade

The term structure shows December options are underpriced relative to historical volatility, creating a favorable buying opportunity for a defined-risk bearish spread. Disney is trading below both the 20-day and 50-day moving averages ($106.65 and $109.85, respectively), with neutral RSI, suggesting limited upside momentum. The stock price of $105.56 is close to the short strike (108), giving room to profit if the price moves down or stays flat. The spread limits max loss to $251 per contract while allowing profit if DIS falls below $105.49 by expiration. This trade also avoids earnings risk since the next earnings are Feb 4, 2026, well after expiration. Institutional buying interest (CW Advisors increased stake 67% recently) and analyst buy ratings support a moderate bullish longer-term view, but the spread provides short-term protection or speculative downside play amid current technical resistance and overall market uncertainty.

📊 Pro Analysis

• Current IV: 49.8% (high overall, but Dec 19 IV is only 21.4%)
• IV Rank: 100% (favors selling premium generally, but Dec 19 is underpriced)
• Expected Daily Move: ±$3.31 (3.14%) — this spread captures a move down to $104-$105 range
• Put/Call Ratio: 0.26 (bullish, so this is a hedge or speculative bearish play)
• Market Maker Max Pain: $120 (well above current price, so downside protection is prudent)
• Technical: RSI Neutral (44.95), Price below 20-day and 50-day MAs
• Fundamentals: EPS $6.88, Profit Margin 14.2%, Moderate Buy consensus, Target $134.41

🔍 Earnings Date Check

Earnings on Feb 4, 2026 — Dec 19 expiration is well before earnings, avoiding earnings volatility risk.

💡 Trade Management

• Entry: Place limit order near $2.51 debit (midpoint of bid/ask)
• Target: Close at 50% profit (~$1.25 gain)
• Stop: Exit if DIS rises above $110 (breaking resistance)
• Time Stop: Close 2 days before expiration to avoid late premium decay

🔒 Pricing Validation

• 104 Put intrinsic value: max(0, 104 - 105.56) = 0 (OTM)
• 108 Put intrinsic value: max(0, 108 - 105.56) = $2.44
• Spread intrinsic value: $2.44 - 0 = $2.44
• Spread price $2.51 > intrinsic $2.44 — valid debit spread
• Put-call parity and spread pricing consistent with market data

🔍 Market Overview

The current market regime is moderately bullish for Disney with strong analyst buy ratings and recent institutional accumulation, but technical resistance near 110 and 200-day MA along with a neutral RSI suggests limited upside in the short term. The Fed rate decision and CPI data are due December 10, adding macro uncertainty. Disney’s fundamentals remain solid with a forward P/E of 16.04 and positive earnings revisions. The high IV rank overall suggests premium selling strategies are generally favored; however, the lower IV in December options provides a rare buying opportunity for downside protection or speculative bearish exposure without earnings risk. The sector peers include NFLX and CMCSA, showing mixed momentum, reinforcing a cautious stance.

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Confidence Level: Moderate. This trade balances risk and reward with defined max loss, leveraging underpriced near-term volatility and technical resistance. It is suitable for traders expecting limited upside or mild downside in the next two weeks without exposure to earnings volatility.

Risk Assessment: Limited risk to $251 per contract, with max reward capped at $149. The trade loses if DIS stays above $108 at expiration but benefits from a decline or volatility increase. Time decay is moderate but capped by the short put leg. This is a conservative bearish spread with defined risk.