Options Bears Pounce on Netflix, Inc. (NFLX)

Netflix, Inc. (NFLX) traders bet on short-term downside

by Griffin Kruse

Published on Apr 20, 2015 at 2:48 PM
Updated on Jun 24, 2020 at 10:16 AM

Netflix, Inc. (NASDAQ:NFLX) is down 0.3% at $569.98 -- but earlier hit an all-time high of $576.13 -- as the stock takes a breather after last week's rally. On the charts, Netflix, Inc. has been a technical standout, with the shares advancing over 66.8% year-to-date, and 35.5% so far in April. However, puts are changing hands at 1.5 times their average intraday pace today, as speculators gamble on a short-term cool-down for NFLX.

The day's most active put contract is the weekly 4/24 560-strike put, where apparent buy-to-open activity has been detected. By purchasing this put at a volume-weighted average price (VWAP) of $4.60, traders predict the shares will fall beneath $555.40 (strike minus VWAP) by the close this Friday, when the contract expires. It is worth noting that the shares of NFLX were trading well below this level prior to last week's post-earnings bull gap.

In light of NFLX's recent uptrend, short sellers have been hitting the bricks on the equity. Drilling down, short interest decreased by 7.3% over the last reporting period, but still comprises 8.4% of NFLX's available float. A continued exit of short sellers from their positions could create tailwinds for the stock.

Meanwhile, the brokerage bunch is divided on Netflix, Inc. (NASDAQ:NFLX), as 40% of covering analysts rate the security a "hold" or worse. Additionally, NFLX's average 12-month price target of $552.92 sits below current trading levels, leaving the door wide open for a round of analyst upgrades and/or price-target hikes to give the shares yet another boost.

Daily Chart of NFLX Since October 2014

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