Netflix, Inc. (NASDAQ:NFLX) – Short term bullish bets initiated on Netflix earlier this week have paid off for some options traders, with shares in the provider of online streaming video services soaring more than 20% since Monday morning on positive comments from T2’s Whitney Tilson and other analysts. Trading traffic in upside call options that have one full trading session remaining until expiration indicate some strategists are positioning for shares in NFLX to extend gains into the weekend. Shares in Netflix tacked on 6.6% this morning to touch $66.75, the highest price since July 25th. Volume in weekly calls is heaviest at the Oct. 05 ’12 $70 strike where upwards of 8,300 contracts changed hands in the first half of the trading day. Traders appear to have purchased most of the calls for an average premium of $0.25 apiece, and may profit at expiration in the event of a more than 5% rally in the share price to $70.25. Further upside in the shares in the back-half of Thursday’s session or a strong open for NFLX shares tomorrow may present opportunities for call buyers to take profits off the table ahead of expiration even if the stock fails to rise above the average breakeven point. Alternatively, traders holding the contracts into expiration may lose the premium paid for the options should the price of the underlying settle below $70.00.
Caitlin Duffy
Equity Options Analyst
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