To The Moon

$Disney (DIS) $The third quarter financial report for fiscal year 2025 will be announced before the U.S. stock market opens on Wednesday.Wall Street analysts generally expect Disney's Q3 revenue to be $23.75 billion and adjusted earnings per share to be $1.48, both indicators increasing from the same period last year.Analysts also expect demand from the company's experience division, which mainly includes Disney theme parks, resorts and cruise ships, to remain strong.

Disney's second-quarter fiscal 2025 results exceeded market expectations, with revenue increasing 7% year-over-year to $23.6 billion and adjusted earnings per share increasing 20% year-over-year to $1.45. The company reported an unexpected increase in Disney + subscribers in the second quarter and forecast a further uptick in the third quarter. The company also announced plans to build a theme park in Abu Dhabi, the capital of the United Arab Emirates. Additionally, the company raised its adjusted earnings per share outlook to $5.75 for fiscal 2025, up 16% from fiscal 2024, after expecting high-single-digit growth.

It is worth mentioning that before Disney's third-quarter financial report is about to be announced, UBS analysts raised their target price on Disney from $120 to $138, and expect this quarter's results to reflect "solid demand" for Disney's theme parks. ", and the profitability of the streaming business will continue to improve before Disney's ESPN plans to launch a new streaming service later this year. UBS analysts said: "We remain constructive on the outlook (for fiscal 2026), driven by underlying trends in theme parks, new cruise capacity, a strong content pipeline, and direct-to-consumer (DTC) The inflection point in business profit margins, in addition to full ownership of Hulu, will also bring upside."

Jefferies analysts pointed out that this quarter is a critical moment for Disney to "shape the market narrative" for the next two years. They said they remain confident in the recent decision to give Disney a "buy" rating and a $144 price target, given the company's upcoming movie and streaming productions, as well as two new cruise ships that will be operational before the end of the year, saying The company has a "favorable catalytic path."

In view of the upcoming Disney earnings report, investors can use the spread strategy to trade.

What is the spread strategy

Spread strategy (Spread Strategy) is a very common combination strategy in options trading. The core idea isBuying and selling different options on the same underlying asset at the same time, to control risks, lock in revenue ranges or reduce costs. Depending on the type of option used, direction, and strike price, spread strategies can be divided into many kinds.

1. Vertical spread Vertical SpreadDefinition: Buying and sellingSame maturity date but different exercise priceOptions of the same type (Call or Put)

• Bull Call Spread Bull Call Spread: Buy a Call with a lower strike price and sell a Call with a higher strike price at the same time, suitable for a moderately rising market → limited gains and limited losses

• Bear Put Spread Bear Put Spread: Buy Put with higher strike price and sell Put with lower strike price at the same time, suitable for moderately falling market → lower cost, limited maximum profit

2. Horizontal spread Calendar Spread/Time SpreadDefinition: Buying and sellingSame exercise price but different maturity datesOptions of the same type → usually used to capture changes in implied volatility or time value convergence

3. Diagonal spread Diagonal SpreadDefinition: Buying and sellingDifferent exercise prices and different expiration datesOptions → have the characteristics of both time difference and price difference, which are more complex and flexible

Disney Spread Strategy Case

Disney is currently trading at $118.32. If investors expect Disney's stock price not to skyrocket in the future, investors can implement the bear market bullish spread strategy through the following operations:

Sell a call option with a strike price of $125, and premium is $131. Buying a call with a strike price of $130 costs $46.

Disney is currently trading at $118.32. If investors expect the stock price to remain at a low level in the future (without skyrocketing), they can adopt the bear market call spread strategy:

• Sell a call option with an exercise price of $125 and get a premium of $131;

• Buy a call option with an exercise price of $130, paying premium $46;

Net income: 131-46 =$85

Maximum loss: Strike spread (130-125 = $5) × 100-Net income = 500-85 =$415

Maximum profit:$85(When the stock price is ≤ $125)

Breakeven point: 125 + (85 ÷ 100) =$125.85

Profit-loss ratio: maximum profit ÷ maximum loss = 85 ÷ 415 ≈1: 4.88

Summary:

If Disney's stock price is ≤ 125 US dollars at maturity, the strategy will achieve a maximum profit of 85 US dollars. If the stock price is ≥ 130 US dollars, the strategy will suffer a maximum loss of 415 US dollars. The stock price is at 125.85 US dollars, which is suitable for investors who believe that the stock price will not rise significantly. market.