Options Trade – Netflix, Inc. (NFLX) Sunday, December 09, 2012

A Peaking Netflix To Provide Profit!

**OPTION TRADE: Buy the NFLX Mar 2013 100.000 call (NFLX130316C00100000) at or under $6.00, good for the day. Place a protective stop limit at $2.50 and a pre-determined sell at $10.00.

by Ian Harvey

December 05, 2012


Volatility obviously can be bad as far as investors are concerned, but for option traders, it can be used to their advantage … with the right strategy…..and this can be effectively applied to Netflix (NASDAQ: NFLX).

Description of Netflix

Netflix, Inc., formerly known as Netflix.com, Inc., is a United States-based company that offers internet subscription service. The Company through its service provides movies and television programs. For one low monthly price, its members can watch movies and television programs streamed over the internet to Personal Computers, Macs and televisions. The devices streaming from the company are the Microsoft Xbox 360, Nintendo Wii and Sony PS3 consoles; an array of Blu-ray disc players, internet-connected TVs, home theatre systems, digital video recorders and internet video players; Apple iPhone, iPad and iPod touch, as well as Apple TV and Google television.

A Bullish Saucer

This stock plunged from $130 to the low $50s late this summer due to management’s poor implementation of a new pricing strategy. But in early September, the stock began forming a saucer (rounding bottom), which is a long-term bullish formation.

The break from the saucer provides a short-term trading opportunity to the top of the open gap made in early April at $90 to $101.79.

Latest Movements

Netflix (NASDAQ: NFLX) certainly has had some volatile days over the last month or so. About a month ago, Carl Icahn announced that he had nearly a $500 million stake in the company, which sent shares higher. The stock slowly crawled higher through most of November until December arrived, and volatility returned.

The stock sold off Monday. Then on Tuesday, Netflix executed a “game changer” on news that they would be the exclusive U.S. subscription TV service for first-run live-action and animated feature films from Walt Disney (NYSE: DIS). At the same time, Sony (NYSE: SNE) said that their PlayStation3 is the world’s most popular device for showing movies and TV shows from Netflix.

Technical Aspect

Looking at NFLX from a technical and options perspective, it might have some more momentum in it to continue to move higher.

NFLX shares have already pushed up through resistance at the 50- and 200-day averages and the Fibonacci 38.2% marker, and are now breaking free of their range for the past eight months. Now it’s an easy shot to move on to the F. 61.8% marker at $103.50.

Therefore, based on the facts above the following options trade is recommended…..

**OPTION TRADE: Buy the NFLX Mar 2013 100.000 call (NFLX130316C00100000) at or under $6.00, good for the day. Place a protective stop limit at $2.50 and a pre-determined sell at $10.00.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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