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Most Active Options Update: Netflix, Inc. (NFLX)

Netflix, Inc. option traders bet on an extended downturn

by 3/25/2014 1:44 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Netflix, Inc. (NASDAQ:NFLX).


Netflix, Inc. (NASDAQ:NFLX) is down 1.8% this afternoon, bringing its month-to-date decline to roughly 17%. Amid this negative price action, overall option volume has jumped to almost two times the typical intraday pace, with puts and calls roughly equal. All 10 of the most active strikes expire at this Friday's close. Highlighting the demand for short-term options is NFLX's 30-day at-the-money implied volatility (IV), which is up 10.4% at 60.9% -- its loftiest perch since last October.

The two most popular options are the weekly 3/28 360- and 365-strike puts. A healthy portion of the 3,830 and 3,466 contracts respectively traded have done so at the ask price, pointing to buyer-driven activity. What's more, IV is higher at each strike, and volume outstrips open interest, making it safe to assume that new bearish positions are being initiated. The options market is giving the lower-strike put a 21% chance of an in-the-money finish at week's end, per its delta of negative 0.21. Meanwhile, delta for the higher-strike weekly option was last seen at negative 0.29.

As noted, NFLX has been struggling on the charts this month. The recent sell-off has been exacerbated this week on concerns over a potential streaming partnership between Apple Inc. (NASDAQ:AAPL) and Comcast Corporation (NASDAQ:CMCSA), and news that billionaire investor Carl Icahn sold roughly half of his Netflix, Inc. (NASDAQ:NFLX) shares. Given the stock's longer-term gains -- NFLX has more than doubled in value over the past 52 weeks to trade at $371.59 -- some of today's out-of-the-money put activity could be indicative of shareholders picking up protective puts.


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