12:45pm (EST)
Netflix (NFLX, $116.04, up $21) surprised Wall Street and the talking heads after the bell last night when they reported a better-than-expected quarter. The bar was already lowered so let’s get that out of the way but the results were impressive.
The company posted a profit of $40.7 million, or $0.73 a share, versus $47.1 million, or $0.87 a share, in the year-ago quarter. Total revenue checked in at $875.6 million, up 47% from the quarter last year.
Here was our chart work on Netflix at the beginning of the year when shares cleared the 50-day moving average (MA) and our thoughts:
“We aren’t sure if a bottom is in but shares could be on the verge of breaking out of a trading range (blue box) in the chart below. Yesterday’s close above $80 was bullish for a run into the $90’s (black line) which is where the next patch of resistance lies. If shares can clear this level there is a chance for a run back to triple-digits ($100-$120) believe it or not.” (END)
Here is what the chart now looks like with the $90 and $120 drawn out:
We mentioned the great chart work we have been doing lately but we failed to capitalize on this move as our portfolio has been pretty full and the options were expensive. We normally like to play options that cost $2 or less and we peaked at the Netflix February 115 calls (NFLX120218C00115000, $7.40, up $4.50) before yesterday’s close and they were at $2.80-$2.90. At the beginning of the month they were under 50 cents.
Netflix was at $95 before Wednesday’s closing bell and when we factored in a 10% price move it put shares at $104-$105 which was below the strike price. We were also nervous that customers wouldn’t be back so soon and their content costs so we sat on the sidelines. It would have been a big risk but the February 115 calls are up 150% today alone.
Netflix also trades WEEKLY options and the January 110 calls (NFLX120127C00110000, $6.30, up $4.15) were at $2.15-$2.25 before the close but these options expire tomorrow. Although the options are up 200%, we didn’t feel the risk/reward was favorable enough for us to pull the trigger. The option premiums were juiced and if Netflix would have missed estimates, these trades would have been all-or-nothings.
We’ve been doing fine without Netflix but we should’ve trusted our chart work.
As far as the market, following a gap higher at the open, the index are struggling to hold their gains. The Dow is up 10 points to 12,767 while the S&P is lower by a 4 points to 1,322. The Nasdaq is off by 9 points to 2,809.
We have a lot to cover in our Members Area today as we are taking action on another current call option trade that is up nearly 60%. We also want to cover the 2 new trades we released this morning so let’s get on it.
Tags: NFLX, NFLX earnings, NFLX options, weekly options
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on Thursday, January 26th, 2012 at 12:51 PM and is filed under Company Commentary, Hot Stocks, Market Analysis, Trading Psychology.
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Netflix (NFLX) Shocks Wall Street, Nothing New
12:45pm (EST)
Netflix (NFLX, $116.04, up $21) surprised Wall Street and the talking heads after the bell last night when they reported a better-than-expected quarter. The bar was already lowered so let’s get that out of the way but the results were impressive.
The company posted a profit of $40.7 million, or $0.73 a share, versus $47.1 million, or $0.87 a share, in the year-ago quarter. Total revenue checked in at $875.6 million, up 47% from the quarter last year.
Here was our chart work on Netflix at the beginning of the year when shares cleared the 50-day moving average (MA) and our thoughts:
“We aren’t sure if a bottom is in but shares could be on the verge of breaking out of a trading range (blue box) in the chart below. Yesterday’s close above $80 was bullish for a run into the $90’s (black line) which is where the next patch of resistance lies. If shares can clear this level there is a chance for a run back to triple-digits ($100-$120) believe it or not.” (END)
Here is what the chart now looks like with the $90 and $120 drawn out:
We mentioned the great chart work we have been doing lately but we failed to capitalize on this move as our portfolio has been pretty full and the options were expensive. We normally like to play options that cost $2 or less and we peaked at the Netflix February 115 calls (NFLX120218C00115000, $7.40, up $4.50) before yesterday’s close and they were at $2.80-$2.90. At the beginning of the month they were under 50 cents.
Netflix was at $95 before Wednesday’s closing bell and when we factored in a 10% price move it put shares at $104-$105 which was below the strike price. We were also nervous that customers wouldn’t be back so soon and their content costs so we sat on the sidelines. It would have been a big risk but the February 115 calls are up 150% today alone.
Netflix also trades WEEKLY options and the January 110 calls (NFLX120127C00110000, $6.30, up $4.15) were at $2.15-$2.25 before the close but these options expire tomorrow. Although the options are up 200%, we didn’t feel the risk/reward was favorable enough for us to pull the trigger. The option premiums were juiced and if Netflix would have missed estimates, these trades would have been all-or-nothings.
We’ve been doing fine without Netflix but we should’ve trusted our chart work.
As far as the market, following a gap higher at the open, the index are struggling to hold their gains. The Dow is up 10 points to 12,767 while the S&P is lower by a 4 points to 1,322. The Nasdaq is off by 9 points to 2,809.
We have a lot to cover in our Members Area today as we are taking action on another current call option trade that is up nearly 60%. We also want to cover the 2 new trades we released this morning so let’s get on it.
Tags: NFLX, NFLX earnings, NFLX options, weekly options
This entry was posted on Thursday, January 26th, 2012 at 12:51 PM and is filed under Company Commentary, Hot Stocks, Market Analysis, Trading Psychology. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.