Netflix, Inc. (NFLX) Options Traders Set Sights on $100

Netflix, Inc. (NFLX) options traders foresee a run deeper into triple-digit territory by week's end

by Alex Eppstein

Published on Mar 28, 2016 at 2:18 PM
Updated on Jun 24, 2020 at 10:16 AM

Netflix, Inc. (NASDAQ:NFLX) has muscled back into triple-digit territory today, up 2.9% at $101.22. Amid the stock's bullish price action, calls are changing hands at 1.4 times the expected intraday rate, and account for nine of the 10 most active strikes.

In the lead is the weekly 4/1 100-strike call, which traders are buying to open for a volume-weighted average price (VWAP) of $1.98. In other words, these call buyers are gambling NFLX will topple breakeven at $101.98 (strike plus VWAP) by Friday's close, when the weekly series expires. The stock last closed above this level on Jan. 21.

The 100 strike has been extremely popular in the past two weeks, on both sides of the aisle. In fact, the four NFLX options that saw the biggest changes in open interest during the last 10 trading days are the March and April 100 calls and puts, each of which added at least 13,600 positions.

Another trend we've seen over the last two weeks is a pronounced preference for long calls over puts. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX's 10-day call/put volume ratio registers at a top-heavy 1.49 -- and just 4 percentage points from an annual high.

Underscoring this call bias is NFLX's Schaeffer's put/call open interest ratio (SOIR) of 0.94. Not only does this ratio demonstrate calls outweigh puts among options expiring in the next three months, it also rests below 84% of all other readings taken in the past year. In other words, short-term open interest is unusually skewed toward calls over puts, from a historical perspective.

Netflix, Inc. (NASDAQ:NFLX) has done its part on the charts to warrant such optimism. Since panning an early February low of $79.95, the stock has rocketed 27% higher, and appears to have found a foothold atop its 20-day moving average.

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