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How to Trade Volatile Disney Ahead of Earnings


Shares of Walt Disney Co. (DIS - Get Report) have experienced several price gaps lower and higher since the stock set its all-time high of $122.08 back on Aug. 4, 2015.

The daily chart for The Magic Kingdom, going back 10 years, shows the diversified entertainment giant had been a solid long-term buy-and-hold portfolio choice. That changed on a dime when the company offered a negative outlook following earnings on Aug. 4. After the stock plunged 26% in just 14 trading days to a flash crash low of $90 on Aug. 24, it lost its status of being a long-term investment.

Disney is expected to report earnings of $1.40 a share after the closing bell Tuesday. The company has beaten earnings estimates for 10 consecutive quarters, but positive reactions to earnings came to an end last August.

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Disney is a component of the Dow Jones Industrial Average (INDU) and at Friday's open the stock is down a fractional 0.5% year to date with the average up just 1.3%.

Must Read: Disney's Movies Come to Rescue as Analysts Still Fret About ESPN's Lost Subscriber Count

While Disney should not be considered core portfolio holding at this time the stock can...