As Barchart featured author Mark Hake mentioned, Disney (DIS) appears to be relatively undervalued. Fundamentally, the Magic Kingdom generated positive free cash flow (FCF) last quarter and looks to sustain this run. Naturally, observing analysts recognized the potential opportunity in DIS stock, raising their price targets. On a technical level, this newfound sentiment has helped shares bounce off their lows.
Per Hake, one mechanism to extract positive returns from the optimistic dynamic is to “short out-of-the-money puts.” In other words, the idea here is to sell (or write) put options, which is a credit-based strategy. Unlike the more common debit approach, the concept of shorting puts is to receive premiums (income) and hope that the other side’s position blows up (in a bad way).
