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Be careful before hysterically responding to this report, because I'm not talking about the stock, but the expensive options I'm seeing trading ahead of the company's likely meaningful earnings report. With just a few days left to expiration on April 26, Netflix's (NASDAQ: NFLX) at the money April expiration calls and puts ($100 Strike Price) were priced at about $7.85 (taking the average of the call and put to adjust for the current price difference off the strike and not adjusting for anything else or market directional leaning).

At this rate, the stock has to move by about 8% by the close this Thursday for an option contract holder to make a dime. I'm sorry, but even despite the potential volatility on earnings news, that's a sucker's bet in Netflix. The investors raking in dough here will be the writers of the options.

It might not matter whether you are betting long or short, or even playing volatility through a straddle strategy, it's going to be difficult to make money within the outlined parameters-- and it's just not worth the effort, in my opinion. We recently documented the losing proposition in a straddle strategy using Chelsea Therapeutics options, even after a 29% move in the stock, due to a sort of mixed decision by the FDA. This quarter especially could offer mixed results for Netflix, the kind that leave investors a bit confused and the stock price change unpredictable.

After several management missteps, Netflix got back to basics and put up results that helped the shares higher earlier this year. We've had a special bead on the stock over the past year, but I wouldn't venture to guess what will happen on this latest earnings news. That's because, after reporting EPS of $0.73 last quarter and $1.11 in last year's first quarter, the company is seen losing $0.27 this quarter (with a whisper loss of $0.12 seen based on this report).

The loss is expected to come on increased international expansion and advertising spending, but if the company doesn't control it, a disappointing tone could overtake the shares. Investors will also be mindful, obviously, of subscription and top line growth. If strong results resound at the top of the income statement, some leeway could be attributed to net income.

In conclusion, with too many dynamics in play and the possibility for a mixed result, I wouldn't venture near the options. According to the cited Seeking Alpha report, the options market is pricing in a 15 point move based on straddle data. While we might get that, depending on operational execution, NFLX and its options are a pure gamble around earnings season, based on recent unpredictability. Other companies about to report earnings with costly April options include Apple (NASDAQ: AAPL) and (NASDAQ: AMZN), given the shortness of time to expiration.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Sucker's Bet In Netflix Options