Tony Zhang's Disney Trade

On CNBC's "Options Action," Tony Zhang suggested that investors should consider a Bearish option trade in Walt Disney Co DIS.

The company is going to report earnings on Tuesday and Zhang thinks risks are skewed to the downside.

He is concerned about Disney's poor relative strength to Communication Services Select Sector SPDR Fund (XLC) and relatively weak guidance from analysts.

Zhang expects to see a significant decline in the theme park revenue and soft numbers from the media and studios segment. Disney+ is the only part of the business that is growing, but its numbers for 2Q are not very attractive, explained Zhang.

To make a Bearish trade, Zhang wants to buy the August $115/$105 put spread for a total cost of $2.90. The trade breaks even at $112.10 or 4.14% below the current stock price. If the stock drops to $105 or lower, the trade is going to reach its maximal profit of $7.10.