Optimism Builds Ahead of Netflix, Inc. (NFLX) Earnings

Netflix, Inc. (NFLX) will report quarterly earnings on Monday night

Apr 15, 2016 at 10:55 AM
facebook X logo linkedin


Netflix, Inc. (NASDAQ:NFLX) is slated to report earnings next Monday evening, in what will be a busy week for quarterly earnings report. Today, our goal is to look at Wall Street's pre-event expectations for NFLX stock, in the options pits and beyond.

Starting things off, NFLX has historically made some big moves following its past eight earnings reports. Specifically, the stock has averaged a one-day post-event swing of 11.6% -- half to the upside, the other half to the downside. Expectations among options traders are roughly in line with this pattern, as the market is pricing in a 12.2% swing, in either direction, following the earnings report.

From the looks of it, most options traders anticipate NFLX's post-earnings price action will resolve to the upside. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.31 calls for each put during the past 10 weeks -- and the corresponding call/put volume ratio ranks in the bullishly skewed 82nd percentile of its annual range.

Underscoring this call bias is NFLX's Schaeffer's put/call open interest ratio (SOIR) of 1.01. While the SOIR shows put and call open interest are roughly equal among options expiring in the next three months, the reading sits below three-quarters of all others taken in the past year.

The brokerage crowd has taken a glass-half-full approach, too. Nearly 60% of analysts recommend buying NFLX, while the stock's consensus 12-month price target of $123.66 represents territory not charted since mid-December.

Meanwhile, short sellers have been hitting the exits ahead of NFLX earnings. During the last two reporting periods, short interest on the stock fell 7.7%. However, 11.8% of its float remains dedicated to short interest, and would take nearly a week to buy back, at NFLX's typical trading levels. It may be that some of the recent call buying has been fueled by short sellers seeking a hedge.

From a technical perspective, Netflix, Inc. (NASDAQ:NFLX) has been a mixed bag. Since bouncing from its mid-February lows around $80, the stock has advanced 38% to trade at $110.40. However, NFLX remains in negative year-to-date territory, and its breakeven level could translate into resistance going forward.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI