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

Weekly options are popular on Netflix, Inc. today

by 7/7/2014 1:01 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 among short-term traders this afternoon is Netflix, Inc. (NASDAQ:NFLX). Falling off the list since last time was Oracle Corporation (NYSE:ORCL).


Netflix, Inc. option volume is running at a slight mark-up to the intraday average this afternoon, with both calls and puts seeing accelerated activity. The weekly 7/11 series -- which expires at this Friday's close -- is popular, with all but one of NFLX's 10 most active options residing in this group.

On the call side, the weekly 7/11 480 strike has seen the most attention, with 3,022 contracts on the tape at last check. A healthy portion of these calls changed hands on the ask side, implied volatility (IV) has shot 8.6 percentage points higher, and volume outstrips open interest -- all signs of buy-to-open activity.

The calls are being scooped up for a volume-weighted average price (VWAP) of $1.68, making breakeven at this Friday's close $481.68 (strike plus VWAP). Gains for the call buyers are theoretically unlimited with each step above here, while losses are capped at 100% of the premium paid, should NFLX settle south of the strike at week's end.

Meanwhile, put players are targeting NFLX' s weekly 7/11 460 strike, where 2,921 contracts have changed hands. A number of these puts have gone off at the ask price, IV is up 5.9 percentage points, and volume exceeds current levels of open interest -- again suggesting new positions are being purchased.

The VWAP for these out-of-the-money puts is $3.22, making at-expiration breakeven $456.78 (strike less VWAP). Profit for the put buyers will accrue on a move down to zero, while risk is limited to the initial cash outlay, should the puts expire in the money at Friday's close. At last check, Netflix, Inc. (NASDAQ:NFLX) was retreating from last week's record high, down 2.1% to trade at $462.50.


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