Mickey and Minnie mouse may be able to afford a house in the Hamptons this year. Walt Disney (DIS) announced yesterday its fourth quarter profits nearly doubled with a revenue growth of 14%. The earnings are thought to be in large part due to the overwhelming success of “Pirates of the Caribbean: Dead Man’s Chest.” Also Disney’s cable networks continue to return strong earnings.
This news coincides with the resignation of longtime Disney CEO Michael Eisner. On September 30 Eisner resigned and severed all ties with the company. Eisner’s relationship with board members and shareholders had been increasingly contentious in recent years. Eisner turned over his responsibilities to his longtime number-two man, Bob Iger.
Disney’s fourth-quarter earnings were greatly improved – $782 million versus last year’s $379 million. Earnings per share rose to $.36 from $.19. The company has a P/E of 22.3 and a forward P/E of 21.
In July, the studio eliminated 650 jobs. Bob Iger made these cuts while intoning Disney would focus less on it R-rated fair and more on its traditional successes with films like “Chronicles of Narnia” and “Pirates of the Caribbean” ( wnd.com ).
Disney’s cost-cutting measures and the success of “Pirates” have increased revenues in their movie studio division by 33%. Even domestic flops like Pixar’s “Cars” have turned the corner and produce strong revenues with worldwide ticket sales.
The company also has its strong standby television division, which includes ABC and ESPN sports. ESPN experienced a 10% rise in revenues this year. And Disney’s theme park division also continues to experience strong revenue growth.
This could mean it’s time to investigate a bullish strategy for Disney. This is where we can turn to the powerful stock options searching tools provided by PowerOptions. Since we already know the stock symbol, and we know we want to look for bullish positions with December stock options expiration we can enter this information into the strategy search summary tool provided by PowerOptions, which reveals the following bullish covered calls stock options positions:
| Covered Calls WALT DISNEY CO (DIS) $33.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
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| 06 DEC 32.50 | $1.75 | 5.20% | 2.10% | 2.10% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 06 DEC $35.00 | $0.55 | 1.60% | 1.70% | 6.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Both covered call investment strategy positions listed above have strengths and weaknesses. The first covered call options position offers great downside protection (5.2%) and the potential profit of 2.1% although not spectacular is respectable. The second covered call options position doesn’t offer the same level of downside protection (1.6%) as the first but, if assigned can yield a healthy potential profit 6%.
If its growth trend continues, Disney may be an interesting stock to keep an eye out for the coming months as well. It may be something we looked at again next month.
Join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
PowerOptions provides Internet based tools for analyzing stock options with specific search criteria and for finding potentially lucrative option income. For those seeking to execute a covered call investment strategy for their personal portfolios, PowerOptions provides an Internet based search engine for finding potentially lucrative income producing covered call options positions.
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[tags]DIS, Disney (The Walt) Co., covered call investment strategy, covered call options, investment strategy, iron condor, option income, poweroptions, stock option trading, stock options, Mickey Mouse, Minnie Mouse, Michael Eisner, Chronicles of Narnia, Pirates of the Caribbean, Bob Iger, Pixar, ESPN, ABC[/tags]