Optimism Builds as Netflix, Inc. (NFLX) Rally Continues

Netflix, Inc. (NFLX) call buyers are eyeing more upside through tomorrow's close

Jan 22, 2015 at 2:34 PM
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Netflix, Inc. (NASDAQ:NFLX) surged more than 17% yesterday, after a stellar quarterly earnings report was met with a round of bullish brokerage attention. The stock is extending this momentum today -- up 3.7% at $424.13 -- thanks to a bullish "buy" initiation at Pivotal Research, which also set its price target at $550, in territory yet to be charted. Options traders are eyeing more upside for NFLX, too, expecting the shares to continue rallying through tomorrow's close.

Taking a quick step back, calls are crossing the tape at two times the average intraday pace. The weekly 1/23 series is in focus, with all of NFLX's 10 most active options expiring tomorrow night. The two most sought-after calls are the weekly 1/23 420 and 425 strikes, and it appears both have seen a healthy amount of buy-to-open activity. Delta on the lower-strike call is 0.69, and 0.47 on the higher-strike call, suggesting a 69% and 47% chance, respectively, the contracts will be in the money at week's end.

Widening the sentiment scope reveals today's accelerated call activity is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX's 50-day call/put volume ratio of 1.05 ranks in the 89th percentile of its annual range.

However, not everyone has climbed on board NFLX's bullish bandwagon. Half of the 28 analysts covering the shares maintain a "hold" or worse recommendation, while the average 12-month price target of $436.42 stands at a slim 3% premium to the stock's present perch. Should Netflix, Inc. (NASDAQ:NFLX) continue to add to its 24.1% year-to-date lead, another round of bullish brokerage notes could create a fresh burst of buying power.


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