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

Short-term NFLX traders forecast additional end-of-the-week gains

by 10/31/2013 2:13 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. Three names of notable interest this afternoon are Netflix, Inc. (NASDAQ:NFLX), Google Inc (NASDAQ:GOOG), and Intel Corporation (NASDAQ:INTC).

Google Inc ran to a new record peak of $1,041.52 earlier, but has since moved back below the $1,040 mark. Option players are betting on this level to hold as short-term resistance by selling to open weekly 11/1 1040-strike calls. Elsewhere, despite Intel Corporation trading higher, one longer-term speculator is adding to his bearish position by buying to open a 19,000-lot of January 2014 25-strike puts. Trade-Alert indicates a similarly sized position was purchased on Tuesday. Finally, here's a closer look at the optimistic activity happening in Netflix, Inc.'s options pits today.


Netflix, Inc. is enjoying a solid day in the green, with the shares up 2% at last check to trade at $324.50. However, one group of option players isn't satisfied with the day's advance, and is calling for a continued move higher through week's end. More than 4,000 weekly 11/1 325-strike calls have gone off the tape so far, a healthy portion of which have done so on the ask side. Implied volatility (IV) is up, and volume outstrips open interest, indicating the initiation of a fresh batch of bullish bets.

By purchasing the near-the-money calls, speculators hope NFLX will muscle its way north of $325 by tomorrow's close. Considering the stock hit an intraday high of $326.65 earlier, this isn't outside of the realm of possibility. Should the equity fail to topple the strike price over the next session-plus, the most today's call buyers have risked is the initial cash outlay. According to Trade-Alert, the volume-weighted average price for the calls is $2.50.

Meanwhile, since reporting earnings on Monday, Oct. 21, the stock's 30-day, at-the-money IV has dropped to 41.4% from 67.3%, suggesting the cost for buying premium on Netflix, Inc. (NASDAQ:NFLX) options is on the decline.


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