NFLX Trade Updates

by Dan April 26, 2011 9:27 am • Commentary

Just when you thought you had NFLX from the short side………..and then you don’t…stock only down ~5.5% in the pre-market…..If you are long, this probably feels like a win…..Careful here as shorts may cover and drive a little early surge, and if it gets up it may stay up…..But if that little short covering rally doesn’t come and the stock can’t rally then that means the big boys have come in to take a little off the table.

-For the suggested trades:

1.APR29 wkly 235/225 Put Spread, treat as short stock as this will be losing extrinsic value, and quick once the stock settles in.  Have to make a risk reward assessment about where the stock is, where u think it will go in the next couple hours, days and then if you are willing to risk the premium that you have on the table…..the clock is ticking.

2. May 240 / 225 / 210 Put Spread Tree…this one you have a bit more time on and as you are net short options the fact that vol should settle in should help and the break-evens are wide….