Analysts, Options Traders Respond to Netflix's Earnings

Options volume is running at 5 times the intraday average

Deputy Editor
Oct 20, 2021 at 10:30 AM
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The shares of Netflix Inc (NASDAQ:NFLX) are falling today, last seen 1.8% lower at $627.43. This dip is taking place despite an upbeat third-quarter earnings report, which saw the FAANG name's profits of $3.19 per share beat analysts' estimates. Meanwhile, the release of previously delayed content helped Netflix secure more subscribers than predicted, adding 4.4 million users.

In response, Netflix stock is attracting some major analyst attention. More specifically, 10 price-target hikes have rolled in, with Wells Fargo raising its objective all the way up to $800 from $700. Meanwhile, Deutsche Bank downgraded NFLX to "hold" from "buy," and Benchmark cut its price target to $485 from $493. Coming into today, analysts were mostly optimistic towards NFLX, with 23 carrying a "buy" or better rating, while six called it a "hold" or worse.

Drilling down to today's options activity, 122,000 calls and 73,000 puts have crossed the tape already, which is five times the average intraday amount. Most popular by far is the weekly 10/22 640-strike call, followed by the 650-strike call in the same series, with new positions being opened at both.

This penchant for calls seems to be reflective of a longer-term trend. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Netflix stock's 50-day call/put volume ratio of 2.42 stands higher than 94% of readings from the past year. This means long calls have been getting picked up at a quicker-than-usual clip in the last two months. 

On the charts, Netflix stock has retreated from its Oct. 7, all-time high of $646.84, though yesterday's session saw the equity nab its second highest close ever at $639. Over the last three months, NFLX has tacked on roughly 23%, guided higher by the 30-day moving average.


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