Interesting November Stock Options For Walt Disney

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Walt Disney Co. ( DIS). So this week we highlight one interesting put contract, and one interesting call contract, from the November expiration for DIS. The put contract our YieldBoost algorithm identified as particularly interesting, is at the $62.50 strike, which has a bid at the time of this writing of 56 cents. Collecting that bid as the premium represents a 0.9% return against the $62.50 commitment, or a 13.1% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

START SLIDESHOW:
Top YieldBoost DIS Puts »

Selling a put does not give an investor access to DIS's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. So unless Walt Disney Co. sees its shares decline 5.7% and the contract is exercised (resulting in a cost basis of $61.94 per share before broker commissions, subtracting the 56 cents from $62.50), the only upside to the put seller is from collecting that premium for the 13.1% annualized rate of return.

Interestingly, that annualized 13.1% figure actually exceeds the 1.1% annualized dividend paid by Walt Disney Co. by 12%, based on the current share price of $66.37. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to lose 5.72% to reach the $62.50 strike price.

If you liked this article you might like

Microsoft's New Xbox One X Shows It's Done Trying to Please Everyone

'The Handmaid's Tale' Emmy Win Is Really Big for Netflix

Stocks Dad Would Have Loved, And Why He Was Right

Disney Gets Bullish Report Aimed at Drowning Out Naysayers

Global Stock Markets Have Lost Their Minds and It's Becoming Pretty Disturbing