strategic pivot in 2020 – one of the worst years imaginable for a theme park operator – is a case study of how effective leaders are often the company’s most important asset.
Executive skills are never transferred to a corporation’s balance sheet or give some tangible estimate, but Disney (ticker: DIS) executives are proof of how good a team can achieve even under dramatic pressures that seem to threaten their company’s economic essence.
When investors were determined to see Disney as nothing more than a problem because the Covid-19 pandemic threatened to make money on the theme parks, company leaders developed a streaming content strategy that seemingly changed the company’s wealth on Wall Street.
Investors are no longer obsessed with the fact that only brave souls would visit theme parks during a viral pandemic. They are now captivated by the potential value of Disney’s catalog of content and creative muscle.
In October, Disney reorganized its media and entertainment business to develop and produce original content for streaming content directly to consumers. Mickey Mouse’s home now uses its world-renowned creativity in a centralized global distribution team to deliver and monetize content across many Disney platforms, including Disney +, Hulu and ESPN +.
Disney stock, which was largely written off as a victim of the Covid-19 pandemic, has since become one of the big success stories of a difficult year. The stock is trading close to a 52-week high, and investors are excited about the future, especially since the pandemic looks set to end in 2021 thanks to the introduction of the vaccine.
We recognized early on that Disney probably had a “streaming strategy” before it became a central fact about stocks. Our clue was when the company was introduced Hamilton on the Disney + streaming video service. The release created national excitement and did almost nothing for the stocks. At the time, the stock was worth about $ 113, and the stock was down 21% for the year.
Now stocks are up 20% a year, and investors can’t get enough of the company – especially after Disney recently unveiled an extremely bullish forecast.
In anticipation that investors will like what Disney reports when earnings in the first quarter are released in early February, consider an aggressive strategy strategy that positions you to buy stocks at $ 170 while participating in rallies above $ 180. The “reversal of risk” – that is, the sale of stakes and the purchase of calls with a higher strike price, but with the same expiration – expresses the view that Disney is a stock worth owning.
With a Disney stock of $ 173.55, investors can sell $ 170 for February for about $ 7.50 and buy a February 180 call for $ 6.80. If the stock is below $ 170 upon expiration, you will be required to purchase the stock, cover the gift at a higher price, or throw a path to avoid the exercise. If the stock is progressing, you would grant credit for selling the item and buying the call.
For example, with $ 190, a call would be worth $ 10. Remember, risk reversal pays investors to agree to buy shares at a price of $ 170 (or to cover or adjust a short run) and to participate in profits above $ 180.
Over the past 52 weeks, Disney shares have ranged from $ 79.07 to $ 179.45.
Without a doubt, dancing around high-flying stocks in the options market is not for the faint of heart. Potential profit profiles are attractive, but they always seem attractive. Keep in mind the risk created by selling an attitude so close to the stock price.
The reversal of risk expresses the belief that Disney executives will continue their managerial tour, like which they should be guided and studied in business schools. But anything unexpected – like hiccups in a streaming content strategy – could spur the best-placed plans of mice and men. b
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