Option Trade Netflix

11 days ago I bought at whole sale Netflix option strike price 130 call option for $284.00 but the first three days the price went as low as 70.00 not a good feeling losing more that 3/4 your investment.  This is one reason why option trading is not for everyone.  However the earning report was due Jan 25th I was expecting high profits since a few months ago they raised there prices. They lost a lot of subscribers but by raising prices it off sets the lose.  I can’t predict the future but the DVD business is slowly dying and Netflix knows this.  They have the raw data to support dvd rentals vs streaming videos and I’m sure streaming old videos more out weights dvd.   This is how I analyze this business but as a trader you have to think differently.

As a trader what I saw was a 1-2-3 bottom and it broke support after $100.00 thats when I got in.  Thinking it had already bottom and maybe was doing a beginning uptrend.  But lets not forget the earnings report season.  When the report came out the price of the stock shot through the roof.  At that point I was already looking for the EXIT strategy.  It is better to make some money then to loose it all expecting to get better price.  I got out at $615.00 so if we do the math 615-284=$331-20commision=$311.00 .

I can be happy with $311.00 in 11 days.

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One Response to Option Trade Netflix

  1. hi91977 says:

    That’s amazing! Doing the math, that’s a 117% return ($615 / $284 -1) and if that’s annualized, it would be 3857% (364days / 11days x 117%). That’s a lot better than what the banks offer on a CD.

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