Netflix Options Traders Take Aim at Key Level Ahead of Earnings – Schaeffers Research (blog)

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Netflix, Inc. (NASDAQ:NFLX) has been one of the hottest stocks on Wall Street in recent weeks, with the shares touching a record high of $199.40 on Monday. NFLX stock was more recently seen trading at $196.10, and with the streaming content company scheduled to report earnings after the close next Monday, more analysts — and, seemingly, options traders — are expecting additional upside from the equity.

For example, Stifel this morning boosted its price target to $230 from $200. The brokerage firm expects Netflix’s spending on content to pay off in the way of strong third-quarter subscriber growth. The security has already added close to 60% year-to-date, and a move to these levels would bring this lead to almost 86%.

Options traders appear bullish, too. In today’s trading, calls are outpacing puts 50,000 to 26,000. The weekly 10/13 series is extremely popular, as many traders bet on NFLX extending its climb higher by tomorrow’s close, when the weekly series expires.

Outside this series, the standard October 200 call could be seeing buy-to-open activity. This would be nothing new, as this strike is fourth among the security’s top open interest positions, and data from the major options exchanges confirms heavy buy-to-open action here. This means options traders expect NFLX to rally above the $200 threshold by expiration at next Friday’s close.

Either way, Netflix stock has a history of making big moves after earnings reports. Going back eight quarters, the shares have averaged a single-day move of 9.2% after such events, including a 13.5% jump last quarter. This time around, the options market is currently pricing in a move of 10.3% for Tuesday’s session.