Netflix Options Traders Take Aim at Key Level Ahead of Earnings

Calls remain very popular on NFLX

by Josh Selway |

Published on Oct 12, 2017 at 12:41 PM

Netflix, Inc. (NASDAQ:NFLX) has been one of the hottest stocks on Wall Street in recent weeks, with the shares touching a record high of $199.40 on Monday. NFLX stock was more recently seen trading at $196.10, and with the streaming content company scheduled to report earnings after the close next Monday, more analysts -- and, seemingly, options traders -- are expecting additional upside from the equity.

For example, Stifel this morning boosted its price target to $230 from $200. The brokerage firm expects Netflix's spending on content to pay off in the way of strong third-quarter subscriber growth. The security has already added close to 60% year-to-date, and a move to these levels would bring this lead to almost 86%.

Options traders appear bullish, too. In today's trading, calls are outpacing puts 50,000 to 26,000. The weekly 10/13 series is extremely popular, as many traders bet on NFLX extending its climb higher by tomorrow's close, when the weekly series expires.

Outside this series, the standard October 200 call could be seeing buy-to-open activity. This would be nothing new, as this strike is fourth among the security's top open interest positions, and data from the major options exchanges confirms heavy buy-to-open action here. This means options traders expect NFLX to rally above the $200 threshold by expiration at next Friday's close.

Either way, Netflix stock has a history of making big moves after earnings reports. Going back eight quarters, the shares have averaged a single-day move of 9.2% after such events, including a 13.5% jump last quarter. This time around, the options market is currently pricing in a move of 10.3% for Tuesday's session.

Get Schaeffer's Opening View every morning before the bell rings.

MORE | MARKETstories

Dow Secures 4th Straight Weekly Win Amid Tax Optimism
All three benchmarks touched all-time highs today
The Stock That's Tripled On Blockchain Buzz
J.P. Morgan Securities sees increased risk in RMAX stock
Deckers Outdoor Stock Ideal for a Bullish Options Trade
DECK call options are attractively priced at the moment
Fed Rate Hike, Net Neutrality, GOP Tax Bill Highlight Busy Week
All three benchmarks are pacing for weekly wins


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.


By MG 2016
In March of 2016, I was introduced to Expiration Week Countdown.  The results are better than words!
Options trading made simple.
Schaeffer's Investment Research, Inc. is dedicated to providing subscribers advantages in options trading and investing.  Our independent market research services create profitable opportunities for investors at every level.