Blockbuster NFLX Earnings Trade


Netflix (NFLX) reported blockbuster results last night. Topline revenues increased, and almost 5 million global subscribers were added last quarter. It fell a bit short on the EPS number, due to foreign exchange hit from overseas revenues due to the strong dollar. Nevertheless this is a massive report.


In the EarningMAX room, we were expecting a bullish performance. Implied Volatility, although it had climbed to 130%, ultimately was underpriced, as the expected move was $44, but the stock has moved over $55. An At the money Straddle would have worked very well, and the market makers went wrong on this one.


We put an Iron condor in the following week’s expiry, but to give it a bullish bias, we stuck a Bull Call spread inside of the Iron Condor at the 500/505 strikes.


Here is our analysis of the trade idea.



And this morning, post the NFLX Earnings announcements, we’re looking very good on the trade. The Bull Put at 415/410 should expire worthless.


The Bull Call spread at 500/505 should be at maximum profit.


And the Bear Call at 545/550 could expire at maximum profit, however, we’re not taking chances. We’re getting into an aggressive adjustment mode to milk this trade.


Here’s the post NFLX Earnings announcement trade video. This is not over yet. We’ve made about 75% profits so far, and we still have the opportunity to go into a triple digit return on this trade.


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