Netflix, Inc. (NFLX) Rally Inspires Confident Options Bettor

A credit spread is being initiated at Netflix, Inc.'s (NFLX) June 75 and 85 puts

May 23, 2016 at 11:48 AM
facebook X logo linkedin


Netflix, Inc. (NASDAQ:NFLX) put options have been popular lately. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options traders have bought to open 1.16 puts for every call during the last two weeks. The resultant put/call volume ratio is just 2 percentage points from an annual peak.

In today's trading, put options are crossing at 1.3 times the average intraday pace -- however, not all of this activity is the result of bearish wagering. Among the most active strikes are the June 75 and 85 puts, where it looks like one trader initiated a credit spread for an initial net credit of $0.41 apiece. In other words, by selling to open June 85 puts, the speculator expects NFLX to remain above the strike through front-month expiration, at the close on Friday, June 17. However, by buying to open June 75 puts, the trader has limited potential losses, in the event the underlying stock breaches the sold strike.

Based on what's happening on the charts today, it's unsurprising to see someone express confidence toward NFLX. At last check, the streaming content stock is 2.8% higher at $95.07 -- although there's no clear catalyst behind the bounce.

From a longer-term perspective, the shares don't exactly inspire confidence. Since touching its most recent high of $111.85 in mid-April, Netflix, Inc. (NASDAQ:NFLX) has tumbled 15%. On a comparative-strength basis, the stock has underperformed the broader S&P 500 Index (SPX) by nearly 10 percentage points over the past two months -- earning it some negative analyst attention in the process.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI