Netflix, Inc. (NFLX) Bears Sweat Disney Deal, Cramer Comments

Netflix, Inc. (NASDAQ:NFLX) is trading higher today, which could have put buyers on edge

by Karee Venema

Published on May 26, 2016 at 10:00 AM

Netflix, Inc. (NASDAQ:NFLX) is popping today, after the tech company said its exclusive streaming deal with Walt Disney Co (NYSE:DIS) -- which is set to go in effect in September -- will include DIS' 2016 theatrical releases. Additionally, CNBC's Jim Cramer said NFLX stock had "more room to run" and was a "potent bull case." Elsewhere, buzz is swirling that Netflix could be a good target for Apple Inc. (NASDAQ:AAPL), amid whispers the iPhone parent had tossed around a potential Time Warner Inc (NYSE:TWX) bid. Against this backdrop, shares of NFLX are up 2.9% at $103.06, and a recent batch of options traders could be sweating.

In fact, NFLX's weekly 5/27 99-strike put saw the biggest rise in open interest overnight, with 4,067 contracts added. It looks like a healthy portion of the activity was of the buy-to-open kind, meaning speculators expect NFLX to breach the $99 by tomorrow's close, when the weekly options expires.

This bearish positioning just echoes the withstanding trend seen in NFLX's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio was most recently seen at 1.12 -- just 6 percentage points from a 52-week peak.

Drilling down, NFLX's June 100 strike is home to peak put open interest among all NFLX options -- second only to the June 100 call -- with 16,578 contracts in residence. According to data from the major options exchanges, new positions have been purchased here in recent months, suggesting put buyers are not expecting the stock to be in triple-digit territory at the close on Friday, June 17, when front-month options expire.

The stock has been on an absolute tear lately, though. Including today's jump, shares of Netflix, Inc. (NASDAQ:NFLX) have tacked on 14.5% month-to-date -- versus a slimmer 2.4% gain for the broader Nasdaq Composite (COMP). Regardless of where the stock settles at options expiration, though, losses for the put buyers are limited to the initial premium paid.

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