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

4/25/12 - Took profits off the table

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4/23/12 -  They missed slightly and that was more than enough to bring the stock down. NFLX was BEATEN DOWN in post market and could very well be on it's way to sub $50 as the market falls into the "sell in May and go away" phase.  Tomorrow is going to be a nice payday on the Puts!

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4/22/12 - Tomorrow is the earnings release after the bell. Will NFLX beat or get beaten down? There has been negative news afoot and complaining from Reed Hastings about unfair business practice from one of his needed bandwidth providers. This type of information can be good insight of the future, but in the short-term its weight is not measured unless they miss and/or talk about it in the conference call as a contributing factor. Looking over the stocks past performance, the argument for a miss is stronger than a beat so the bias for me would be on the put side. I have been looking for a short in this stock for over a week now, and it turned into a decent Bull 180 Play last week instead.

The charts shows continued downside pressure on the weekly and Monthly. The stock has analyst ramblings and price targets of $120 a share and it certainly could achieve that if they beat; however, if the miss and guide lower, it's gong to be on for a drop well under $100 per share.

Notice how this last weeks action was on diminished volume. There is NO love from big investors to get long.

Here are the options:

Notice the HUGE open interest on the May 85 Puts and  115 and 130 Calls. There are a lot more people bullish so if they do beat, there will not be a lot of short covering to drive the stock substantially higher in the short run. According to www.shortsqueeze.com there are approximately 9.2 million shares short which translates into 1.8 days to cover.

I am looking at the Weekly 90 Puts and Monthly $115 Calls

Here are the charts

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4/18/12 - No action today, just held its ground from yesterday's market supported move. I will get short and pick up some protective calls tomorrow and some puts on Friday ahead of Monday's earnings announcement.

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4/17/12 - Well today was a market wide rally and NFLX was covered by the shorts. I hardly believe it was a buy opportunity since the volume was actually 2 million shares below average. I suspect this stock will easily reverse back tot he downside on any market correction so I am looking for a possibly follow through to the $112-115 area. Now, if they manage an earnings beat and more importantly a sizeable pick up in "streaming" subscribers, then the race could certainly be on for the $125 area.

As for options plays into earnings, there will not be a lot of opportunity for a solid "Lotto" play because expiration is this Friday and they announce next week. That means there will be a lot of premium in the May options so you will have to gamble more on weekly options. I will look over option candidates Thursday and Friday.

4/16/12 - NFLX is reporting earnings on 23rd and if they miss yet again, it could be time to retest the lows from last years. If you have been following the stock lately, you know there are some ramblings that Comcast is reneging on an agreement between them; and this could cause a lot of pain to the flow of content NFLX offers.  Not to mention the up and coming competition from Apple, Amazon, Hulu, Msft and just about every content provider out there. Although NFLX has a massive audience lead, what they do not have is the kind of dying loyalty that Apple has. After all, Apple can charge you much higher prices for their products and get it with smiles and happiness whereas, NFLX tried to just change up the way they deliver content and got massively whacked. It's hard to please fickle people and I just do not see this stock ever rising to its past glory. Of course, there will be plenty of trading opportunities so I will just keep following along and looking for opportunities to profit. My bias is to the short side in the long term until they show a clear change in direction.

Profits Up!

The donFranko