Netflix, Inc. (NASDAQ:NFLX) has lost more than 25% since its last quarterly report in October, where they missed the estimates on subscribers growth. Since 2012, Netflix, Inc. (NASDAQ:NFLX) stock has grown significantly, but the recent downtrend in stock brings the thinking of streaming out of this stock to many investors. Option Action traders Dan Nathan, Michael Khouw and Carter Worth discussed about Netflix, Inc. (NASDAQ:NFLX) stock on CNBC and shared their options play to make money out of it.
Worth pointed out that almost all the top stock went through a big uptrend and then followed a break in trend, just like Netflix, Inc. (NASDAQ:NFLX) stock. He pointed out that in the last two years there was a big uptrend in Netflix, Inc. (NASDAQ:NFLX) stock combined with a head and shoulders on the top and a neck line. He pointed out that there were a lot of quarterly beat jumps in the Netflix, Inc. (NASDAQ:NFLX) stock in the last two years, but the one that happened in October 2014 was the first Quarterly mess up. Worth feels that this stock might still go lower by 15% to $290.
Khouw feels that in order to make money the investors should not short the stock in first place. He also added that investors should not go and outright buy option, since it is too expensive. He shared his option play to make money out of the Netflix, Inc. (NASDAQ:NFLX) stock.
“To keep it simple I am just going out to March, buying the 300-275 put spread. Spend about $6 for that. $13.5 for the 300’s. About $7.5 for the 275’s. You are spending less than a quarter of the distance between the strikes here. Remember that’s the kind of risk-reward relationship we like,” Khouw said.
He feels that it gives the investors a little bit of time to play out the stock. He added that the content stocks are high and even the new ‘Marco Polo’ series is not as successful as the older series by Netflix, Inc. (NASDAQ:NFLX). Khouw feels that this is the only way to make money out of the Netflix, Inc. (NASDAQ:NFLX) stock.
Nathan feels that there is no point in pressing a stock like Netflix, Inc. (NASDAQ:NFLX), where this is a lot of short interest. He pointed out that after a huge drop after last earnings report, the stock rallied again by 10% after the comments by Mark Cuban. He feels that it is better to wait for the fourth quarter earnings report of Netflix, Inc. (NASDAQ:NFLX), before making any big decisions on the stock.
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