Netflix, Inc. (NFLX) Option Traders Eye a Big Bounce

Now is an opportune time to buy Netflix, Inc. (NFLX) options

Andrea Kramer
Jan 11, 2016 at 2:11 PM
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Streaming content giant Netflix, Inc. (NASDAQ:NFLX) is up 2.1% at $113.74, despite coming up short at the Golden Globes. Netflix led with nine nominations in TV and film, but Amazon.com, Inc.'s (NASDAQ:AMZN) "Mozart in the Jungle" won for best TV series (music or comedy), while Twenty-First Century Fox Inc (NASDAQ:FOXA) took home the most awards, with eight statues. Furthermore, NFLX call options are running hot, suggesting traders are looking for more short-term upside.

Intraday call volume is running at 1.4 times the average pace, and NFLX stock volume is in the 83rd percentile of its annual range. Most active is the January 2016 120-strike call, which has seen apparent buy-to-open action. The calls will move into the money if NFLX climbs back atop $120 by Friday's close, when front-month options expire.

Today's appetite for bullish bets is just more of the same for NFLX, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 1.37 stands higher than 96% of all other readings from the past year.

What's more, now is an opportune time to buy NFLX's short-term options. The stock's Schaeffer's Volatility Index (SVI) sits at a relatively mild 64%, in the 39th percentile of its annual range. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) is perched at a lofty 98, implying that NFLX has tended to make outsized moves on the charts during the past year, relative to what the options market has priced in.

Netflix, Inc. (NASDAQ:NFLX) was one of the best stocks to own in 2015, more than doubling in value. Since touching an all-time high of $133.27 in early December, the stock has taken a breather, but has found a foothold in the form of its 32-week moving average. This trendline contained NFLX's pullbacks in the fourth quarter of 2015, and could once again launch the equity even higher.

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