Disney (NYSE:DIS) stock has had a tough month. The stock dropped from trading around prices of $106 down to $100 after its last earnings announcement, then despite some consolidation around $102, DIS wasn't able to gain any real momentum, then last week with the news that Florida was going to get hit hard with Hurricane Irma, we saw DIS take another hit before the weather even hit the state.
DIS fell down sharply trading around $96 Friday. While some may be worried about how much lower the stock will go, I believe the sell off in DIS is over and this is actually a great time to buy. Im looking to buy a 99 call option in DIS that expires Sept 29 to take advantage of a pop in price as fears take pressure off the stock.
1. Hurricane Irma has left Florida
Some of the move down in DIS may have had to do with the release of their growth report last week, but combined with the fears of wiping out the magic kingdom from the hurricane, this moved the stock lower than it should be. Friday actually saw the stock move down $5, with most of the momentum of the move occuring as Disney announced their evacuation plans to keep guests and employees safe during the hurricane. Now that the hurricane has passed, todays open has already seen the price of the stock move up from $96 to $97 which I believe is the first signs that fears have subsided, and people will be back enjoying the theme park in no time.
2. Support From Technicals
DIS stock has seen $97 as a strong level of support for more than 1 year. Looking at this daily chart, you can see that price doesn't move below $97 for long. The stock spends more time above $97 than below which is why I think last weeks move was a quick dip, but we will see the stock move above $100 again.