Netflix Is Still Good To Go
Netflix, Inc. Credit Spread (Nasdaq: NFLX)
TheOptionPlayer.com recommends a Netflix (NFLX) short-term (8-day) option strategy. Investors could simultaneously:
Sell the Sept. week-four expiration NFLX $320 call for $1.63 (yesterday's closing price)
Buy the $325 call at $.96 (yesterday's close)
The difference between funds received and paid out is a $.67 per share credit which we keep if Netflix stock closes below $320 on Friday Sept. 27th, but immediately exit the position if it appears the price will end up higher. Another suggestion is if the price gaps higher in the morning open the trade using higher strike prices. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.
Why we recommend it:
Last week we basically set up the same trade that worked out perfectly. The rationale related to the analysis of the previous trade is still valid as Netflix, Inc. (NasdaqGS: NFLX) share price is pulling back from extremely overbought levels (as defined by the Relative Strength Indicator (RSI)). Several news articles released today supports our contention that Netflix shares are due for a pause and most of the recent analysts reviews rate the stock as neutral or at fair value. The chart below displays the price pullback. At the very least there is a high probability that Netflix, Inc. stock will continue to trade below the $320 target for another week.
52-Week High: $314.18
52-Week Low: $53.05
Average Volume (3 month): 3,040,320