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Netflix, Inc. (NASDAQ:NFLX) has been nose diving since hitting a record high of $458 in early March, pressured progressively lower by the stock's 10-day moving average. At last check, the shares were 5.2% lower at $314.27 -- meaning it would take a rebound of nearly 46% to return to all-time-high levels. This negative price movement, however, is not reflected in NFLX's options pits.
Diving into the details, on the International Securities Exchange (ISE), the streaming content provider has seen 8,233 calls bought to open, compared to 5,574 calls, during the past week. In other words, traders have picked up nearly 1.5 long calls for every put in the previous five sessions.
Even from a wider vantage point, this bullish bias holds up. Specifically, NFLX's 10-day call/put volume ratio on the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at a top-heavy 1.20. This ratio ranks higher than 84% of comparable readings from the past 12 months, conveying traders' stronger-than-usual appetite for long calls over long puts, relatively speaking.
Meanwhile, Schaeffer's put/call open interest ratio (SOIR) on Netflix rests at 0.85, meaning call open interest outstrips put open interest among options expiring in the next three months. What's more, this SOIR sits at the bottom of its 52-week range, which suggests that short-term traders' preference for calls over puts has never been greater in the last year.
On Wall Street, however, sentiment toward NFLX is considerably more mixed. On the one hand, the stock has received just 10 "buy" or better ratings, versus 18 "hold" or worse recommendations. On the other, the shares' consensus 12-month price target of $383.01 represents a considerable premium to their current price.
All things considered, Netflix, Inc. (NASDAQ:NFLX) appears to be in a precarious position, from a contrarian perspective. Should the stock's underperformance continue, an exodus of option bulls and/or a series of price-target reductions could exacerbate losses.