Netflix, Inc. (NFLX) Option Bulls Keep Eyeing a Comeback

Netflix, Inc. (NASDAQ:NFLX) options traders haven't stopped upping the bullish ante

Aug 11, 2016 at 10:36 AM
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Netflix, Inc. (NASDAQ:NFLX) is up 2% at $95.78 this morning on news the company's director, Jay Hoag, purchased 300,000 shares of the stock, after buying up twice that many shares last month -- a decision that's already seeing better results than a similar move from yesterday. Still, NFLX is sitting on a 16.3% year-to-date loss, and has been stuck beneath its 160-day moving average since April. But options traders haven't stopped placing bullish bets lately, with many continuing to take aim at the $100 level, which the shares haven't toppled on a closing basis since early June.

In fact, peak open interest on NFLX resides at the August 100 call, followed by the September 100 call. Over the past 10 days, speculators have been taking aim at even bigger gains. The November 105 and 115 calls saw the largest rise in open interest over the period. Meanwhile, the September and October 110 calls were also high on the list, with both seeing mostly buy-to-open action.

Today, at least, options traders appear to be targeting more modest gains. NFLX calls are crossing at twice their typical intraday rate, outnumbering puts by more than 2-to-1, and accounting for all 10 most active options so far. The weekly 8/12 series is particularly popular, with the 95- and 96-strike calls taking the top spots. It appears traders are purchasing new positions at both of these strikes, looking to make a quick profit if NFLX can continue its rally though the close tomorrow night, when the weekly series expires.

As mentioned, a preference for calls is far from unusual in NFLX's options pits. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.79 sits lower than 98% of the past year's readings, showing short-term traders have taken an unusually call-skewed approach. And at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 1.81 sits just 1 percentage point shy of an annual peak.

Aside from the 8% of NFLX's total float currently sold short, skepticism on the Street can be seen among analysts, nearly half of whom maintain a "hold" or worse rating on Netflix, Inc. (NASDAQ:NFLX). Still, it looks like the brokerage bunch has its eye on triple-digit levels, as well, since the average 12-month price target on the stock sits at $105.08 -- a level the shares haven't seen in roughly four months.

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