Netflix Stock Eyes Four Straight After Upgrade

Options bulls are blasting NFLX today, in response

Digital Content Manager
Jun 25, 2021 at 10:11 AM
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FAANG stock Netflix Inc (NASDAQ:NFLX) is up 2.2% at $529.20 at last check, after Credit Suisse upgraded the streaming giant to "outperform" from "neutral," while maintaining its price target of $586. The analyst in question said subscriber growth should normalize in the fourth quarter, and highlighted the company's high user satisfaction as well as its competitive edge. Plus, the firm noted NFLX offers an attractive valuation and entry point.

Analysts were already overwhelmingly bullish towards the stock, making today's bull note even more impressive. Of the 30 in question, 23 carried a "buy" or better rating. Plus, the 12-month consensus target price of $613.68 is a 15.9% premium to current levels. 

After hitting a Jan. 20 all-time high of $593.28, Netflix stock has carved out a channel of lower highs. After bouncing off their 320-day moving average earlier in the month, the shares are on the upswing once again, eyeing their fourth consecutive win. Still, NFLX remains below its year-to-date breakeven level.

The options pits echo the analyst optimism. This is per Netflix stock's 10-day call/put volume ratio of 2.91 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all readings from the past year. This means calls are being picked up at a quicker-than-usual rate.

Drilling down to today's options activity, 59,000 calls and 9,385 puts have crossed the tape already, which is six times the intraday average. Most popular is the 6/25 530-strike call, which expires later today, followed by the 7/2 540 call, with new positions currently being opened at both.

These traders are in luck, as NFLX options can be had for bargain right now. This is per the stock's Schaeffer's Volatility Index (SVI) of 24%, which sits in the low 4th percentile of readings from the past year. In simpler terms, options players are now pricing in low volatility expectations. 

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