Entry is Key...Exit is Everything! ^TM

2/24/12 - As predicted, NFLX failed to hold $125 and has now become a SHORT to a gap fill from the earnings release. I placed a few put trades and was profit stopped out on Tuesday making a very nice profit:

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2/14/12 - No love on Valentines day for this stock. NFLX took a nice ride down today losing ($4.60) per share. I still want to see if they stay under $125 heading into options expiration. If the stock shows weakness tomorrow I will short it.

Here are the current options I am holding on this stock:

I will be looking to add more as the stock heads back down.

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2/10/12 - Pretty good week for Netflix, but pulled back quite a bit from the $133 high  last Tuesday.. As you can see from the chart below, this is a pretty strong resistance area when the stock was pounded after 3rd quarter 2010 earnings. I am watching the price action at the $120 area and if this stock does not make a move back over $127-$130 next week I am going SHORT and staying short unless this weeks high is taken out.

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2/7/12 - Profit Stopped out at $25.00 which is a nice profit and helped ease the pain of the losing puts this round.  We still have a week so the puts could possibly get some life in them...lol...NOT!  But who knows. The markets could very well melt down next week right?

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2/3/12 - NFLX still holding above $125 but I am looking at the $120 price where for my next short opportunity with Puts.

As for this Lotto Play, the calls are still making money so my stop loss is moved to $20.

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1/26/12 - Wow, this stock may have found some love again and the price could head back to the glory days? I do not think so myself. In fact, once this news wears off and some of the last investors standing from the deluge in share price take their profits, I think this stock will see lower prices for a while. It's going to take a couple of quarters before this stock is trusted by institutional investors. The put plays are most likely going to expire worthless but the Call plays will take some of the sting off those losses.

Currently, I have a new strategy working on NFLX and that one has made over a $10k profit and could keep on printing money if NFLX finds wings and keeps flying higher.

If this stock fails to take out $120, I will look at shorts again.

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1/25/12 - NFLX beat estimates and the stock jumped in after hours trading. Will it hold? Time will certainly tell.

They increased revenue above conservative estimates as well as streaming subscribers in the US and more than expected internationally. The loss of 2.5 million DVD subscribers was already priced into this earnings release.

So far, the talking heads are touting NFLX as a stock to invest in so that translates to a buy for the most part, but not short term investment if you do.

My Lotto put plays will not be making any money, but my calls should cover most of the loss on those if the stock gets over $110 as the month progresses; however, I will be watching how the stock handles $120 price ranges going forward.

Even though this was good quarter, it was expected; therefore, most of this initial move is priced in and it will still take several quarters before big money institution begin to overweight this stock.

Here are the options plays I put on this morning.

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1/24/12 - Tomorrow is the big day for NFLX and this quarter will be a deciding one for the direction of this stock.

Here are the closing options and tomorrow I will put on my plays but as you can see, there is a lot of volatility priced in so its going to be very difficult to make a large profit with these choices.

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1/23/112 - Today's action shows there is NO confidence this stock will make a great earnings announcement. If they miss it's look out below, and if they surprise the stock could see some initial upside but not that much in my estimation. There are approximately 10 million shares short but this stock averages 10 million shares a day in volume, so there is not that much pressure to put on a multi-day short squeeze. My bias is to short this stock so I am going to layer my puts and buy some weekly calls tomorrow.

Here are the latest option prices:

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1/21/12- NFLX earnings are going to be this Tuesday 1/25/2012 and things are going to be explosive with this stock. If they miss again, it's lights out and this beaten stock will see sub $50 over the next couple of trading months...maybe even worse. However, if they at least meet analysts expectations, but more importantly, they have gained back new subscribers, then you can anticipate an initial pop in the stock price in post earnings; and an eventual continuation to the gap ranges from Sep-Oct 2011.

How do you play this one is going to be tough because we have a new month starting on Monday and there will be plenty of volatility priced into this stock making the DOTM calls and puts expensive. With that said, I am suggesting you should break your contract load into a multi strike spread trade to get the best chance of making a profit.

Here is list of options prices at Friday's close:

My strategy will be to pick up 1 or 2 call contracts at the money and then 1 of each strike below the closing price on Monday heading into Tuesday trading. Depending on the action tomorrow, I will pick up the DOTM puts first and then get my other plays. The goal here is to assume a 10-15% move and cover those strike prices on the put side. This way, if the stock moves that much, I should make enough profit to pay for my DOTM puts and maybe even pay for my calls if they miss. If the stock gets whacked, then my DOTM puts will be the icing on the profit cake! If they beat and move higher, then my calls will hopefully pay back all my puts.

Remember, we are setting these plays up to capture a "Lotto" type win and are NOT trying to maximize a particular trade. Most of these plays I post will end up in a ZERO sum gain, but as you have seen in my past, the ones that do pay off PAY OFF BIG!

Profits Up!

The donFranko

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1/16/12 - The price action last week remained UNDER the $100 mark. This shows there are NO institutional investors ready to "buck up" and buy into the latest rally...hmmm...could that be a big fat STOP SIGN? Looking at the charts we have to discern the next possible move in order to get positioned for a nice profit opportunity. The target price ranges will be $125 on good news and $50 on bad.

Looking for option contract prices we need to look at the major moving averages, particularly the 100MA and 200 MA; however, this stock has been beaten down severely and these moving averages are now the resistance vs. support. As you know, my favorite strategy is my "Lotto Play" and I love to trade options just above a major moving average to give me the best opportunity to make a nice profit. So, with that in mind, we have to figure out what will be the be best strike prices since this stock is below the major MA's.

How you determine this is by observing the volume and open interest of options. The more open interest there is, the harder it will be for a stock to move above or below that price.

Looking over options prices below, we can see that the $100 strike is the favorite place options investors are confident this stock can trade aand since this represents a lot of resistance at $100 we will need a substantially good report to push this stock higher.

WOW notice how the open interest dies after the March expiration:

Now we need to look at the deep OTM options to see where we can set up our nets:

Here are the Feb DOTM puts prices today;

Next week I will post the Weekly options because I want to trade Puts on the weekly and calls on the monthly.

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1/9/12 - Wow nice day today!! The price stopped .35 cents short of the magic $100 mark as predicted. I was surprised it got there today, but when this stock rocks, it ROCKS!

The question is, will this hold up? Only the coming earnings report will determine that, so we have to be ready with a straddle to capture some profits. Be assured, there will be plenty of volatility priced into the options; especially because earnings are going to be released after Jan expiration. I will be looking to the weekly put options and the monthly call options as we approach the big day. If things work out, you could see this stock make a run for the last gap at the $180 mark over the next couple of months; however, if they are bad, well, I think this stock will be DONE and on its way to sub $40's.

These are typically very bullish candle stick symbols so it's going to be interesting to see how things play out the rest of this week.

Its looking like love is on the run for NFLX today. Could it be time to get back into a new meteoric ride to financial bliss or just the beginnings of a bad romance?

Looking at the charts, you can see there was a lot of volume today; however, its only the beginning of the year, so you cannot really place a lot of value on a single day of trading in a very beaten down stock. Remember, this stock will forever have to PROVE itself worthy of investor (meaning institutional) money to make a real rise in share price that will sustain itself and build long-term profits.

You can be sure there are a lot of investors who hope to see a rise back to it's glory days of 2011, but those are the hopes and dreams of ignorant and novice investors. The real clues to what this stock will do is in the open interest of option contracts...the long term option contracts to be exact and the strike price you want to watch is the $100.

Stocks on the move like to rise to the whole number and everyone likes to run a stock to $100 a share. It's more like a rite of passage than an act of conscience to hit the hundred dollar per share mark, so you need to watch for the open interest to rise at  this strike price.

The upcoming earnings report is Jan  23, 2012, so if this stock races to the $100 mark, you can bet every dollar it will be sorely punished by institutional investors if they miss and subscriber base has fallen more from the last earnings report. I love to play puts on this stock, but I know there are millions of investors with buyers remorse for not getting into this stock a few years ago; and they will be thinking today's action is the opportunity missed and buy with enthusiasm on any spec of good news so be ready to jump on the long side if that be the case.

Going forward, we will have a lot of short-term opportunities to make quick profits if you are able to watch this stock daily.

Here are today's option prices:

Here is next years prices so it will be interesting to see how this stock does going forward.

Next we look at the "news" stores to see what all the hoopla is about.

There is not big news to justify today's move, so it could be a suckers rally to get novice uninformed investors to jump in. Typically, I see events like today as a short0term opportunity to

Now we look at the key stats to get a baseline going forward

Notice how the actual "Price/Book value of this stock is only $9.77 a share? NFLX still has a long way to drop if they cannot gain any traction with investors over the next two quarters.

Profits Up!

The donFranko