Here’s why a Disney turnaround could be coming: Trader

Disney shares are down 17 percent over the past year, but according to one trader a turnaround could be afoot.

The company's stock has suffered from a decline in ESPN ratings and cord-cutting, but with earnings next week it could be a case of so bad it's good.

"This is a situation stock trading at one of its lower valuations, maybe you can get a bump to the upside," Optimize Advisors president Mike Khouw said Thursday on CNBC's "Fast Money."

Disney reports earnings on Thursday, and the options market is implying a move of about 3.7 percent in either direction, slightly higher than its average move of 3.4 percent.

"We saw mostly bullish activity, … it was the November 96.5-calls," said Khouw. He noted that buyers of those calls paid about 90 cents, and they are betting that the stock will be above $97.40 by the November expiration date. That's a 4.5 percent move from where the stock is currently trading.

The media powerhouse has already posted its best year ever at the box-office, setting a record of over $5.85 billion in global ticket sales through Nov. 1. With Marvel's "Doctor Strange" releasing worldwide Friday as well as animated film "Moana" opening Nov. 23, Disney is poised to close out a strong year on the big screen.

Analysts polled by FactSet are expecting Disney to post earnings of $1.16 per share on $13.53 billion in revenue.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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