NFLX Analysis

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

One thought on “NFLX Analysis

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