Netflix, Inc. (NFLX) Option Bulls Quiet After Cooperman's Exit

Netflix, Inc. (NASDAQ:NFLX) option bulls may be taking a breather after a major investor unloaded shares

Sep 1, 2016 at 12:04 PM
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Netflix, Inc. (NASDAQ:NFLX) is down 0.5% at $96.68 so far today, after Leon Cooperman of Omega Advisors announced yesterday he had sold off his shares in both the streaming media stock, as well as financial stock Citigroup Inc (NYSE:C). Cooperman said he had no particular reason for ditching his NFLX holdings, and option players seem to be taking a moment to assess.

NFLX option pits have been unusually quiet, with today's option volume sitting lower than 99% of all other readings from the past year, while call volume hit an annual low yesterday. Eight of today's 10 most active options are 9/2 weekly options, with the 9/2 95-strike put leading the way, after seeing at least some buy-to-open action on Wednesday. Option buyers at this strike are betting on a fall below $95 by expiration tomorrow, a 1.7% drop off NFLX's current perch.

The September 100 call is the top open interest strike for NFLX, with over 37,000 open contracts, while the September 100 put is the second most popular, with over 18,000 contracts open. The heavy call open interest at this strike could reinforce existing round-number resistance, especially given that NFLX has hit a ceiling at the $100 level several times since June. The stock's 200-day moving average is also hovering just above the $100 mark, representing yet another potential level of resistance.

Despite these technical challenges, action in the NFLX option pits has been decidedly call-skewed as of late. NFLX's 50-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.39 sits higher than 96% of all other readings from the past year, showing a definite bullish bias. In addition, NFLX's Schaeffer's put/call open interest ratio (SOIR) of 0.73 sits lower than 98% of all other readings taken in the past 12 months, indicating near-term option players have rarely been more call-heavy.

Netflix, Inc. (NASDAQ:NFLX) has had a rough go of it in 2016, with the stock stair-stepping lower since the beginning of the year, currently down 15% since the beginning of January. Besides resistance at the $100 level, the shares have spent the last several days just below their 180-day moving average, which has rejected multiple NFLX rally attempts since the stock's post-earnings bear gap in mid-April. On the other hand, NFLX has rebounded from the $85 level several times since May, indicating a reliable level of support for the streaming services stock.


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