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Making a Move on NFLX with Options



January 09, 2012 – Comments (0) | RELATED TICKERS: NFLX

Yikes! Netflix just can’t stay out of the news.  At least today it was a good announcement about their expansion into the UK.  By now it is no surprise that Netflix has taking a bad bounce and dropped over half of its value.  Since then it has been a rollercoaster ride only touched by the gutsy speculators.

Today I noticed a trade to be made in NFLX as it began to pullback and consolidate on an intraday level.  The play was a short put on the weekly options.  The short put will allow us to take advantage of NFLX moving higher but also not hurt us if it were to stay flat or even drop a bit.

The puts we were looking at are on the 75 strike for a .15 ($15) credit.  This would yield a 2.00% return on investment for a 4-5 day hold.

The position was put on when NFLX was trading at 89.  At the close of today it is at 98 so we are moving in the right direction.

Here's the rest of the article (w/chart).


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