Could Netflix Stock Be Primed for More Record Highs?

The stock is getting a boost as streaming competitor Disney stumbles

Deputy Editor
Nov 11, 2021 at 2:10 PM
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While Netflix Inc (NASDAQ:NFLX) was knocked from its record peak earlier this week, the stock is slowly but surely making its way back up the charts. NFLX is up 2.6% at $663.45 today, getting a boost as streaming competitor Disney (DIS) stumbles. The stock looks to have found its footing near its previous record highs at the $640 level. What's more, this level sits just above a trendline that suggests Netflix stock's rally is far from over. 

According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, the security just came within one standard deviation of its 40-day moving average, after a lengthy period above the trendline. Over the past three years, seven similar pullbacks to this trendline have occurred, and 71% of the time, NFLX enjoyed positive one-month returns, averaging a 5.7% pop in this time period. A similar swing from its current perch would put the stock right above the previously untouched $701 region. 

nflx nov 11

Despite a brief pullback during its post-earnings session, Netflix shared upbeat third-quarter results in late October, which attracted plenty of bull notes. The stock currently sports 21 "buy" or better ratings, compared to just seven "hold" or worse recommendations. 

Options traders, on the other hand, have been more pessimistic, and an unwinding of these bearish bets could put additional wind at the streaming stock's back. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.33 stands higher than all but 1% of readings from the past year. In other words, short-term options traders have rarely been more put-biased.

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