Netflix Puts Popular As Earnings Loom

The FAANG stock has shed 40% since May 1

Managing Editor
Oct 7, 2019 at 1:05 PM
facebook X logo linkedin

The shares of Netflix Inc (NASDAQ:NFLX) are higher today, up 1.2% to trade at $273.97, shaking off a price-target cut to $300 from $380 at Evercore. The analyst in coverage noted that the streaming field is becoming crowded, and due to Netflix's pricing, could be stuck in a "race to the bottom."

The analyst caution over Netflix stock is well-founded considering its recent struggles. Since a May 1 high of $385.99, the shares have shed 40%, with their descending 30-day moving average containing breakouts. While Netflix stock is clinging to its year-to-date breakeven level, it has shed 26.7% in the last three months, and could face more tailwinds next month when Walt Disney (DIS) launches its Disney+ streaming service.


Also weighing on Netflix could be the company's third-quarter earnings report, set for after the close on Wednesday, Oct. 16. Looking at NFLX's earnings history, the stock has tended to struggle in the immediate aftermath of its results. Specifically, the equity has closed lower the day after earnings five times over the past two years, including the past three quarters in a row, and a 10.3% drop back in July. This time around,  the options market is pricing in a one-day, post-earnings swing of 13.7%, regardless of direction, compared to an average post-earnings move of 5.9% over the past two years.

Options traders have come out of the woodwork lately ahead of the event. The stock just showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest options volume during the past 10 days, with names highlighted in yellow new to the list. In the last two weeks, roughly 637,474 calls have changed hands on NFLX, compared to 613,645 puts.

MAO Oct 7

Options traders have started to target puts in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX's 10-day put/call volume ratio of 1.04 ranks 2 percentage points from an annual high, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI