Netflix, Inc. (NFLX) Options Traders Take Aim at the Century Level

Netflix, Inc. (NFLX) is trading just below the century level after a bullish analyst note

by Kirra Fedyszyn

Published on Sep 6, 2016 at 12:31 PM
Updated on Jun 24, 2020 at 10:16 AM

Streaming giant Netflix, Inc. (NASDAQ:NFLX) is 2.3% higher at $99.60, after an analyst at Piper Jaffray suggested the stock is trading at a 25% discount to fair value. As it is, the shares are on pace to close above $99 for the first time since early June. But the triple-digit $100 level continues to be a barrier to the stock, and it's exactly this price point options traders are targeting today.

NFLX calls are changing hands at 1.4 times the average intraday rate, with nearly 44,000 calls on the tape so far. The weekly 9/9 series is popular, accounting for seven of the stock's 10 most active options. The top spot belongs to the weekly 9/9 100-strike call, where both buy- and sell-to-open action has been spotted.

Buyers of the call are betting on the shares to conquer the century mark by week's end, when the series expires, while call sellers expect $100 to continue to serve as resistance through Friday's close. Looking farther down the list, the September 100 call is also among the most popular options today -- as is the weekly 9/9 100-strike put.

Buyers of the stock's near-term options are likely getting an incredible bargain at the moment. NFLX's 30-day at-the-money implied volatility of 27.8% is in the low 4th percentile of its annual range, while its Schaeffer's Volatility Index (SVI) of 25% is seated at a 12-month low. That means premium on the equity's short-term options is pricing in historically low volatility expectations right now.

More broadly, options traders continue to be call-skewed in the extreme toward NFLX. In fact, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.72 sits lower than all other readings taken in the last year. And at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX's 50-day call/put volume ratio of 1.38 is just 6 percentage points from an annual high.

Outside of the options pits, sentiment is less optimistic. While short interest slipped slightly over the most recent reporting period, it still accounts for roughly 8% of the stock's total float. And more than 43% of analysts following Netflix, Inc. (NASDAQ:NFLX) rate it a "hold" or worse. Even this may be more than the stock deserves, however, as the shares have been stuck beneath their declining 200-day moving average since their April post-earnings bear gap.

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