Netflix (NFLX) Is Still Good To Go
Netflix, Inc. Credit Spread (Nasdaq: NFLX)
TheOptionPlayer.com sets up a Netflix (NFLX) short-term (8-day) option strategy. Investors could simultaneously:
Sell the Oct. week-one expiration NFLX $330 call for $1.57 (yesterday's closing price)
Buy the $335 call at $.96 (yesterday's close)
The difference between funds received and paid out is a $.61 per share credit which we keep if Netflix stock closes below $330 on Friday October 4th, but immediately exit the position if it appears the price will end up higher. Another recommendation 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:
Two weeks ago we set up similar Netflix, Inc. (NasdaqGS: NFLX) trade that was successful. Last week we basically recommended the same trade that also worked out profitably. Actually, during the week Netflix shares hit a 52-week high intraday and then crashed to end the day significantly lower. We have all heard the mantra "trade with the trend". In the case of Netflix stock the chart below confirms the trend is range-bound. You can see how the price has remained dutifully within a trading range for the past few weeks as the analysis applied to the recent Netflix trades is still valid. What will probably happen is as its October 23rd earnings announcement approaches Netflix price will break out of its trading range as investors make bets on how they think the company is doing. But for the next week or so there is a high probability that Netflix, Inc. stock will continue to trade below the $330 target.
52-Week High: $320.29
52-Week Low: $54.16
Average Volume (3 month): 3,058,190
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.