>>>I’ll be live trading the close for Stonkamania Daily at 3:30 PM ET today!<<<
Disney (DIS) reports earnings after the close Wednesday, and I think it could be one of the best bearish setups on the board. The stock just triggered one of my favorite patterns — a classic lowercase “h” sell formation — and put buyers are already moving in ahead of the print.
You don’t see this kind of setup often, especially not in a name as high profile as Disney. We’ve got a slow grind higher after the initial flush followed by a clean rollover.
Volume popped on that first leg down and if we break the recent low, I think it could really unravel.
A Clean Technical Breakdown With Fuel Behind It
The May 9 expiration, $90 strike puts already traded — that’s the strike I’m eyeing. There’s also some action in the monthly $93 puts, which hit earlier Monday, and then a second order hit this afternoon.
If you like a little more time, the monthly puts could be the play. But personally, I like the weeklies for a quick hit if we get that flush.
On top of the chart pattern, the options market is pricing in a $6 implied move. For a stock that’s already weak, that’s a lot of juice. If this thing disappoints — and let’s be honest, Disney hasn’t exactly been crushing it lately — we could easily crack $90 or even test the prior low around $80.
What Could Trigger the Drop?
Even with Netflix reporting solid earnings recently, I’m skeptical Disney will get the same treatment. The market feels like it’s looking for an excuse to punish this name.
A weak quarter, soft guidance or even just more streaming losses could be the nail in the coffin.
Now, Bob Iger’s back at the helm, and maybe he’ll try to pull a rabbit out of the hat with a surprise buyback or some flashy announcement. But honestly, if that were coming, I feel like the stock would already be moving.
Right now it’s stuck — and that’s exactly when breakdowns happen.
This is one of those setups that checks a lot of boxes — technicals, flow and timing all line up.
Let’s see if Mickey can survive earnings — but I wouldn’t bet on it.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. This Setup Handed Lance a 96% Win Rate in a Terrible Market
About $11 trillion has been lost over the last 10 weeks…
Yet I was able to nail a96% win rate on a daily setup for 4PM Payouts.
Let me show you how it’s done!
