Could Disney Shares See More Downside After Thursday's 9% Plunge? Options Market Offers Clues

Shares of Walt Disney Co DIS closed 8.73% lower on Friday after the company reported a fall in subscriber numbers, sparking concerns among investors. The decline marked the steepest single-day fall witnessed by the stock ever since Bob Iger returned to the company as the CEO, according to a Reuters report.

Disney reported second-quarter revenue at $21.82 billion, up 13% year-over-year. However, total subscribers to the Disney+ service declined by 4 million to 157.8 million.

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Going forward, an important question on investors' minds would be how much more pain will the stock witness in the coming days. To be able to analyze the potential stock movement better, here's a look at crucial trading levels factored in by the options market for the week ahead:

1. Support: Options expiring on May 19 show significant open interest accumulation at the $90 Put strike. This appears interesting because the stock closed at $92.31 on Thursday. The fact that potential support is being priced in so near the closing level of the stock could potentially mean traders are expecting a limited downside in the near term. The $85 Put strike is also witnessing decent open interest accumulation, showing it could act as the second line of support if the $90 mark is breached on the downside.

2. Resistance: Options expiring on May 19^th indicate significant open interest accumulation at the $100 Call strike. This indicates the market is considering this level to act as the first line of resistance. The $105 Call strike is also witnessing significant open interest accumulation and the open interest change figure also appears profound. This shows the level is expected to provide stiff resistance in case the $100 mark is breached on the upside.

It is noteworthy that open interest levels only provide a fair idea about support and resistance levels. Any major news or a macro event can lead to significant movement in stock price and a subsequent shift in open interest levels.

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