Options traders are expressing renewed optimism for Netflix ahead of its upcoming earnings report on Thursday, following a year-long bear market and an almost 20% decline in the stock year-to-date [1]. In recent sessions, call option volumes have doubled puts, with nearly three times as many calls bought versus puts by midday Monday, according to ThinkOrSwim data [1]. One of the most popular trades has been selling at-the-money puts, with the 75-strike put expiring Friday seeing 20,000 transactions on Monday, of which 15,000 were likely sales, generating nearly $150,000 for one large seller [1].
Technically, Netflix is trading around $75, a level that coincides with its price at the end of its pursuit of Warner Brothers Discovery in February and where it began a sharp 80% selloff in late 2021 before recovering to a peak of $134 in June last year [1]. Todd Gordon, founder and CIO at Inside Edge Capital, noted that Netflix is now testing a rising 200-week moving average and the $70 support level, suggesting that if this support holds, sentiment could shift positively for the stock [1].
Options pricing implies a 7.6% swing after earnings, slightly above the average realized move of 7.4% over the past year, according to Cboe LiveVol data [1]. Despite the recent bullish options activity, Netflix shares have fallen after each of the last four earnings reports, following three consecutive rallies in the preceding quarters [1].
On the fundamental side, Netflix has faced criticism for a lack of breakout hits in the last quarter, with Nielsen reporting its share of TV viewership at the lowest level in over a year [1]. Rich Greenfield, co-founder and TMT analyst at LightShed Partners, noted that while engagement is growing in the U.S., viewership per subscriber is down modestly, likely due to new ad-supported users watching less than older ad-free users and increased competition [1].
CONCLUSION
Options traders are positioning for a potential rebound in Netflix shares, betting on a significant post-earnings move despite recent underperformance and lackluster engagement metrics. The technical setup and bullish options activity suggest growing optimism, but the company's ability to deliver a breakout hit and reverse declining viewership per subscriber remains in question.