Dish Network Loses 19,000 Subscribers in Q2
Dish Network (DISH - option chain) stock is trading lower today after the company reported earnings this morning, posting a second-quarter profit of $257 million, or 57 cents per share, on revenue of $3.17 billion. Analysts had forecast a profit of 53 cents per share on revenue of $3.13 billion. However the company also said it lost a net of 19,000 customers during the quarter, which is certainly not good news for the stock. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on DISH.
This morning, DISH opened at $19.33. So far today the stock has hit a high of $19.59 and a low of $18.47. As of 11:55, DISH is trading at $18.69, down $2.15 (-10.3%). The chart for DISH looks neutral and S&P gives DISH a neutral 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $23 range. A bear-call credit spread is an options position that cobines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in four months as long as DISH is below $23 at December expiration. Dish Network would have to rise by more than 22% before we would start to lose money. Learn more about this type of trade here.
DISH hasn't been above $23 at all in the past year except for two days in May and has shown resistance around $21 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in DISH.