NFLX Bulls in a Frenzy as Stay-at-Home Stock Surges

The equity sport a 60% lead for the year

Digital Content Manager
Aug 31, 2020 at 11:14 AM
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Thanks to data courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, we have a list below comprised of 20 stocks that have attracted the highest weekly options volume over the last 10 trading days, with new additions highlighted in yellow. One such addition is FAANG name and stay-at-home staple Netflix Inc (NASDAQ:NFLX), which surged to an all-time closing high of $537.53 last week, following an upbeat research note from Citi. The analyst initiated coverage on sector-peer Roku (ROKU) with a "buy" rating, and suggested strong subscriber growth would also benefit Netflix as well.

A survey from Piper Sandler, which also came out last Tuesday, indicated most U.S. customers would be willing to accept a price increase in their Netflix subscription, and that the majority of subscribers planned on hanging on to their plans once the COVID-19 crisis subsides. 

While the equity has seen a slight correction since last week's surge, the recently supportive 50-day moving average still sits just below, while a previous ceiling at the $510 level could also provide some support going forward. Meanwhile, NFLX is down 0.9% at $519.14 today, but it still boasts a 60.4% year-to-date lead. 

NFLX Chart Aug 31

This positive price action, paired with recent analyst attention, has options bulls coming out in droves.According to White's data, 408,054 NFLX calls were exchanged during the past 10 days, double the 201,564 puts traded in the same time period. A lot of this activity took place at the weekly 8/28 550-strike call, which expired last Friday, with the 540-strike call in the same weekly series coming in close behind. Between these two positions, 53,495 contracts were exchanged.  

In fact, Netflix calls have rarely been more popular. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX sports a 50-day call/put volume ratio of 1.96. This ratio stands higher than all other readings from the past year, suggesting option traders haven't been more bullish. 

Most Active Options Aug 31

Today's options activity is relatively quiet, with 15,000 calls and 11,000 puts across the tape thus far -- just a fraction of the intraday average. The weekly 9/4 series is receiving some attention, however, with the 475-strike put and the 550-strike call being the two most popular positions.  

 

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