Walt Disney Co (NYSE:DIS) had a good day of gains on Tuesday, gaining more than 1.5 percent in less than two hours of trading. While share volume is healthy at 9.2 million shares (versus the 10-day average of 9.9 million), it's worth noting how options traders are extremely optimistic about Disney to finish the year.
Traders sold around 202,000 contracts in the Disney options market on Tuesday, with about 170,000 calls and 32,000 puts.
With this in mind, options traders have been extremely bullish on Disney with almost 84 percent of all option contracts being calls on the day.
In contrast, the open interest (before Tuesday's trading) was just 888,000 calls and 810,000 puts; that's only 52% of the options being calls. As a result, Tuesday's option activity is distinctly bullish.
Furthermore, more than half of all options traded today are short-dated, which means they will expire this coming Friday.
Short-dated options are typically traded rapidly since they are subject to rapid theta decay (time) and have only three trading days left. Because of this, they are more likely to be sold soon as the week progresses.
These short-term options might provide a strong bullish bias for the week, but they will almost certainly cause volatility to rise as they run out at the end of the week. That suggests next week may be a volatile one for the stock.
The Jan. 21 expiration is the next largest volume, with the majority of options contracts on the call side and considerable open interest between $150 and $170.