Tune Into This Streaming Stock's Earnings Tonight

Netflix stock tends to underperform the day after earnings

Assistant Editor
Jan 20, 2022 at 2:34 PM
facebook twitter linkedin

The shares of Netflix Inc (NASDAQ:NFLX) are up 1.5% at $523.38 at last check, just ahead of the streaming giant's  fourth-quarter earnings report, due out after today's close. Netflix stock has chopped lower on the charts so far in 2022, shedding nearly 13% this month despite historically outperforming in January. The 320-day moving average, which NFLX managed to close above since the broader market's March 2020 pullback, is putting pressure on the shares, while the $510 area has moved in up as a floor. Year-over-year, the stock is down 10.8%.

NFLX Chart Jan 20

The equity has a dismal history of post-earnings reactions, finishing seven of eight next-day sessions lower in the last two years, including three of its last four. Options traders are pricing in a 9.4% swing for Netflix stock this time around, which is higher than the 6.2% move the security averaged after its last eight reports, regardless of direction.

There's ample pessimism in the options pits ahead of earnings. In fact, NFLX's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 87% of readings in its annual range. This suggests a much healthier-than-usual appetite for puts in the last two weeks.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.22 ranks in the 75th percentile of its annual range. This indicates near-term put open interest outweighs call open interest by a wider-than-usual margin at the moment.


Special Offers from Schaeffer's Trading Partners