What’s Up With Netflix?

Netflix’s earnings have dropped… and now, the bears are really out on the streaming giant

After day-trading yesterday…

Here’s how I’m looking to trade Netflix and TWO bonus plays!

Ticker Code Ticker Name Ticker Industry Price Change Average Volume (50)*
NFLX Netflix Inc Entertainment 15.41% 8,872,787
GNUS Entertainment -255.44% 64,109,750
EROS Eros International plc Entertainment -7.54% 3,998,112
DLPN Dolphin Entertainment Inc Entertainment -65.66% 5,065,650
DIS Walt Disney Co Entertainment -3.91% 13,488,286
VIAC CBS Corporation Common Stock Entertainment 2.98% 14,016,729
LYV Live Nation Entertainment, Inc. Entertainment -9.14% 3,127,932
CMCSA Comcast Corporation Entertainment 3.01% 20,432,434
CHTR Charter Communications Inc Entertainment 4.44% 1,044,578
DISCA DISCOVERY COMMUNICATIONS INC. Common Stock Entertainment -9.38% 4,785,785
CIDM Cinedigm Corp Entertainment -106.25% 3,142,996
LIVX Livexlive Media Inc Entertainment 13.25% 1,147,131
CNK Cinemark Holdings, Inc. Entertainment -32.17% 4,697,292
DISH DISH Network Corp Entertainment -3.55% 3,237,090
AMC AMC Entertainment Holdings Inc Entertainment -33.50% 5,621,603
YVR Liquid Media Group Ltd Entertainment 5.00% 871,814
DISCK Discovery Inc Series C Entertainment -10.31% 2,572,035
IMAX Imax Corp Entertainment -4.11% 1218586
LBTYA Liberty Global PLC Class A Entertainment 1.52% 1,233,034
WWE World Wrestling Entertainment, Inc. Entertainment -2.37% 591,235

In Q1 and Q2 of 2020, Netflix (NFLX) added 10M new subscribers to their streaming service as many individuals found themselves spending more time at home, and Netflix is basically the king of stay-at-home streaming entertainment.

But on Netflix’s most recent earnings announcement, financial analysts stated that it would be nearly impossible for Netflix to continue adding 10M or more new subscribers to their streaming services during Q3 and Q4…

What this means is that Netflix’s growth and revenue is now expected to slow in the second-half of 2020 after surging in early 2020.

Now let’s talk about how Wall Street’s biggest money options players have been trading Netflix this week…

The put-to-call ratio is two-to-one. This means that twice as much money in option flow is short-biased on Netflix right now than long-biased.

The bears are out, and honestly, I think they’ll consider taking their profits today as both Microsoft (MSFT) and Tesla (TSLA) have reported earnings, and trading may now be a little less volatile until it’s Apple’s (AAPL) turn to drop its earnings report.

NFLX Daily Chart

If Netflix can make its way above $494 resistance, I’ll consider buying NFLX July 24 520 Calls to capture a bullish move to the upside.

Below $490, and Netflix could actually drop ten dollars or so, in which case I’d keep an eye on the put option flow, likely the NFLX June 24 485 Puts.

Two bonus trade ideas to start your day:

  1. Netflix sympathy play: EROS International (EROS) is an up-and-coming streaming company. A small-cap stock, EROS moves quickly, mostly on news. I’ll be watching the EROS August 21 5 Calls if EROS can trade above $3.50
  2. If the Nasdaq goes green-to-red today: I’ll have my eyes on QQQ July 24 263 Puts

I hope you’ve found value in my analysis this morning.

Let me know how you do today!

Davis Martin
America’s #1 Options Trader

Disclaimer: This is not investment advice. This article is for information purposes only and opinion-based on financial advisor data across a selection of websites. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.

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