Streaming Giant Cooling from Record Ahead of Earnings

The options pits are firmly bullish towards Netflix stock

Digital Content Manager
Oct 14, 2021 at 2:54 PM
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The shares of Netflix Inc (NASDAQ:NFLX) are up 0.8% at $634.90 at last check. The last time we checked in on the streaming giant, it was attracting positive analyst attention, after buying videogame maker Night School Studio, in an attempt to diversify its revenue stream. Now, the security is gearing up for its third-quarter earnings report, which is due out before the open on Tuesday, Oct.19. Below, we will dive into the equity's technical setup and its previous post-earnings activity. 

Netflix stock has been chopping higher on the charts, culminating on its Oct. 7, all-time high of $646.84. The 320-day moving average was a strong support for the shares between May and September of this year, while the $620 area contained the security's latest pullback. Over the last nine months, NFLX has added 26.6%.

NFLX 320 Day

The equity has a dismal history of post-earnings reactions, finishing six of eight next-day sessions lower in the last two years. However, it did log a 16.9% pop in January. Options traders are pricing in a 7.4% swing for the security this time around, which is higher than the 6.2% move Netflix stock averaged after its last eight reports, regardless of direction.

The brokerage bunch is firmly bullish towards Netflix stock, with 23 of the 29 analysts in coverage calling it a "buy" or better. Meanwhile, the 12-month consensus target price of $625.38 is in line with current levels, indicating the equity may be overdue for a round of price-target hikes. 

The options pits echo that optimism. This is per the security's 50-day call/put volume ratio of 2.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 99% of annual readings. This means long calls have been getting picked up at a faster-than-usual pace. 

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