A stock price in free fall. Reshuffles in the mix C. Company layoffs. A failed takeover bid. This isn’t a new drama on Netflix, but rather the drama that has surrounded the streaming giant as it limps forward with the stock down nearly 50% from its all-time highs.
Options traders are betting the drama may be coming to an end.
Current option prices imply a 9% move after earnings, which is the highest since its Q3 2022 report, where it was priced for an 11% move. Netflix shares outperformed that implied move that quarter, rising 13%. This time around, a hint of optimism replaces what has become an almost automatic quarterly disappointment. The stock has seen a median move of 7.25% over the last eight quarters.
As of noon ET on Tuesday, one and a half times as many calls had been bought as sales on Netflix, while more sales had been sold than bought on more than 150% of average daily volume. Six of the ten most purchased contracts were calls, with five expiring this Friday. When traders sell puts, it is a bullish strategy.
The largest transaction recorded on the Netflix tape was a seller of a series of 70-strike put options expiring on November 20 for a total of approximately $2 million. Notably, these contracts are right on price, making this transaction a major vote of confidence for a stock that desperately needs some reassurance heading into this afternoon’s release.
Netflix, year to date
There was also notable buying of calls on the 80 strike calls expiring this Friday. Traders purchased over 3,500 of these contracts for a premium worth over $210,000. As a reminder, this would require Netflix stock to rise at least 20% by Friday to break even, a jump of more than double its implied upward move.
The trader appears to be betting that Netflix’s profit-loss streak could end soon.
Gn bussni
