On CNBC's Options Action, Mike Khouw suggested a bullish options strategy in Netflix, Inc. NFLX. He said that it is very hard to trade the stock based on the valuation, but those who want to place a bullish bet ahead of earnings should buy the March 135/155 call spread for $5.75.
The trade breaks even at $140.75 or 5.23 percent above the current market price and it can maximally make a profit of $14.25 if Netflix jumps to $155 or higher. The company is going to report earnings on January 18 and it moves on average 13 percent on the event. This time the options market is implying the move of 8.5 percent in either direction and Khouw needs Netflix to jump 15.89 percent until March for his trade to reach its maximal potential.
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