Netflix Inc. (NFLX)
NFLX publishes earnings on Monday after the closing bell.
I shall use the MAY series of options, which trades for the last time 32 days hence, on May 19.
Implied volatility stands at 43%, which is 2.9 times the VIX, a measure of the volatility of the S&P 500 index.
NFLX’s IV stands in the 48th percentile of its annual range and the 95th percentile of its most recent broad movement.
The price used for analysis was $147.00.
| Premium: | $13.10 | Expire OTM | |
| NFLX-iron fly | Strike | Odds | Delta |
| Calls | |||
| Long | 175.00 | 93.8% | 8 |
| Break-even | 163.10 | ||
| Short | 150.00 | 59.1% | 46 |
| Puts | |||
| Short | 150.00 | 41.0% | 54 |
| Break-even | 136.90 | ||
| Long | 125.00 | 87.5% | 10 |
The premium is 52% of the width of the position’s wings.
The risk/reward ratio is 1.5:1.
Decision for My Account
I am passing on NFLX. The risk/reward ratio is higher than I like for this sort of trade. The stock at the time of decision was priced at $146.90.
By Tim Bovee, Portland, Oregon, April 17, 2017
Tim Bovee, Private Trader 
[…] I entered four new positions today: BAC, HOG, RF and UAL I analyzed two others but rejected them on risk/reward ratio grounds: GS and NFLX. […]
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