NEW DIRECTIONAL CALL PLAYS
Netflix, Inc. - NFLX - close: 101.52 change: +4.64
Stop Loss: None. No stop at this time.
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 8.0 million
Entry on August -- at $---.--
Listed on August 25, 2015
Time Frame: Exit PRIOR to Earnings in October
New Positions: Yes, see below
Some of the market's best-loved stocks have been crushed in the last couple of weeks. NFLX is one of them but this big decline offers a big opportunity.
If you're not familiar with NFLX, here is a brief summary from the company,
"Netflix is the world's leading Internet television network with over 62 million members in over 50 countries enjoying more than 100 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments."
NFLX is cashing in on a massive sea change in consumer media viewing habits. Traditional TV is dead. Cable is worried as more and more consumers "cut their cord" and only consume media on streaming services. NFLX is the leading streaming service in the world.
The company said their customers watched over 10 billion hours of streaming content in the first quarter of 2015. That is a +20% jump from a year ago. The company has been focused on building up their own original content creation and expanding overseas. Just this week NFLX announced a deal with Japanese company SoftBank that would bring NFLX to Japan. Softbank is a bit of a technology conglomerate with stakes in multiple companies. One of their biggest investments is an 80% stake in Sprint (S). NFLX also struck a deal with T-Mobile. There seems to be a trend here of consumers, Netflix, and their smart phones.
The carnage over the last several days has been brutal. Shares of NFLX have plunged from its recent highs above $125.00 to almost $85.00 during Monday's market crash. Today the stock bounced with a range of $101.52-107.88. There is no denying the volatility in NFLX's stock. However, multiple analysts have said that investors should buy the "market darlings" like NFLX during this sell-off. They believe stocks like NFLX will outperform in the next few weeks and over the next few months.
Prior to the market's crash over the last few days analysts were upgrading their price targets on NFLX into the $140 area.
Tonight we are listing two different entry triggers to buy calls.
NOTE: This is an aggressive, higher-risk trade. NFLX options are expensive and the stock is volatile. We are not listing a stop loss at this time. Traders can try and limit their risk by adjusting their position size.
If NFLX rallies from current levels then we want to buy calls if shares traded at $110.65. We'll use the November $120 call.
If NFXL sinks from current levels then we want to buy calls on a dip at $92.00. We'll use the November $100 call.
- - TWO DIFFERENT ENTRY POINTS - -
#1) Buy-the-dip trigger: If NFLX hits $92.00
- Suggested Positions -
Buy the NOV $100 CALL (NFLX151120C100)
- or -
#2) Breakout trigger: If NFLX hits $110.65
- Suggested Positions -
Buy the NOV $120 CALL (NFLX151120C120)
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike