Netflix, Inc. (NFLX): How Can You Make Up To 10% Profit At Low Risk Of $1 On The Downside?

Netflix, Inc. (NASDAQ:NFLX) had a pretty poor final quarter of 2014 after a disappointing quarter earnings report in October. Netflix, Inc. (NASDAQ:NFLX) stock has dropped more than 25% in the last 6 months, which is very huge. But still many feel that there is a possibility to make money out of Netflix, Inc. (NASDAQ:NFLX) stock. Trading Advantage Senior Market Strategist Scott Bauer shared his options play on Netflix, Inc. (NASDAQ:NFLX) stock on Bloomberg TV.

Bauer said that he is planning to come back into Netflix, Inc. (NASDAQ:NFLX) stock, but he added that he would do it with some caution. He suggested that something like a call butterfly spread looking into the upside trend could be done on Netflix, Inc. (NASDAQ:NFLX) stock to make high profits at low risk.

“What I am going to do on the weekly January 23^rd options. I want to buy the 340 call. I sell two of the 355 calls and I buy one of the 370 calls. [….] It gives me a lot of upside movement here. It cost me about a dollar. So that’s my downside here. But I make money Julie if this thing goes from $341 all the way upto $370ish, I make money. Anything below $341 or above $370 the most I can lose is a dollar. But I gives me that whole upside play,” Bauer said.

Bauer added that this play gives him a whole 10% upside play either moving into the earnings or on the earnings. He feels that this is a great play to make money out of Netflix, Inc. (NASDAQ:NFLX) stock at very low risk of just $1.

Bauer’s option play can provide a huge profit if the stock can go above $340 and stays within $370, which is currently trading at $334.45. But will earnings report have positive impact on Netflix, Inc. (NASDAQ:NFLX) stock is the big question, the answer of which might decide if Bauer’s options play reap rewards or not.

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