Options Traders Brace for Big Moves in Netflix Stock
16 Janeiro 2020 - 4:58PM
Dow Jones News
By Gunjan Banerji
Options traders are forecasting a large swing for Netflix Inc.
shares after the streaming-video company reports results next
week.
They are projecting a 7.6% move after the company reports
earnings on Jan. 21, according to data provider Trade Alert. That
is above the average 6% move recorded after the last eight earnings
releases.
The forecast is based on an options trade called a "straddle"
that entails buying both bullish and bearish options contracts that
allow investors to buy or sell stock at a specific price. The
projection is based on the size of the swing rather than the
direction.
Netflix tends to be volatile after its earnings as investors
closely parse its latest financials on new subscribers and pace of
growth around the world.
Recently, competition among streaming companies has heated up.
Walt Disney Co. is focusing efforts on its own streaming service.
Comcast Corp.'s NBCUniversal and AT&T Inc.'s WarnerMedia will
also reveal their own streaming platforms next year.
The company's shares have advanced this year, as the FANG trade
of buying hot technology stocks such as Facebook Inc., Amazon.com
Inc., Netflix and Google parent Alphabet Inc. has continued to pay
off for investors. Netflix shares have risen 4.5% in January to
$338.08 in recent trading.
Some investors were making short-term bets this week ahead of
earnings. Some of the most actively traded options contracts on
Thursday were call options tied to the shares jumping to $340 or
$350 through the end of this week, according to Trade Alert. Calls
give the right to buy stock at a specific price, later in time. One
popular trade this week involved buying bullish call options tied
to the shares hitting $380 after earnings, Trade Alert data
show.
Write to Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
January 16, 2020 14:43 ET (19:43 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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