Netflix, Inc. (NFLX) Options Red-Hot Amid M&A Chatter

Netflix, Inc. (NASDAQ:NFLX) call options are flying off the shelves amid unconfirmed buyout chatter with Walt Disney Co (NYSE:DIS)

Sep 30, 2016 at 1:43 PM
facebook twitter linkedin


Walt Disney Co (NYSE:DIS) has been a popular target for M&A speculation of late, with Netflix, Inc. (NASDAQ:NFLX) emerging as the latest rumored buyout candidate. Unconfirmed takeover chatter (subscription required) has seemingly sent NFLX stock and options volume surging today, with the streaming video giant last seen 2.5% higher at $99.09.

NFLX call options are flying off the shelves at twice the average intraday clip, and have more than doubled puts thus far. While many speculators are rushing to place eleventh-hour bets with weekly 9/30 calls -- which expire at tonight's close, and account for six of the seven most active contracts -- it looks like some bulls are betting on triple-digit territory for NFLX within the next week.

Specifically, it seems traders are buying to open weekly 10/7 100-strike calls, which will move into the money if NFLX topples $100 by the close on Friday, Oct. 7. Although NFLX hasn't ended a week above the century mark since early June, delta on the call jumped from 0.21 yesterday to 0.40 today, indicating a 40% chance of finishing in the money.

Today's appetite for NFLX calls isn't new, though. The stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) rests at 1.40, higher than roughly two-thirds of all other readings from the past year. In other words, options buyers have picked up NFLX calls over puts at a faster-than-usual pace during the last two weeks.

On the charts, it's been a relatively rough 2016 for Netflix, Inc. (NASDAQ:NFLX), which is down 13.4% year-to-date. Today, however, NFLX shares are set to end atop their 200-day moving average for just the second time since before their mid-April bear gap. Off the charts, NFLX is already in an exclusive streaming deal with Walt Disney Co (NYSE:DIS), and is no stranger to takeover speculation.

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.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners