DailyPlay – Opening Trade (NFLX) – May 31, 2022

View NFLX Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 2 Contracts July 15, 2022 $170/$190 Put Verticals @ $6.20 Credit.

Total Risk: This trade has a max risk of $2,760 (2 Contracts x $1,380 per contract).

Counter Trend Signal: This is a Bullish strategy on a stock that is experiencing a bearish trend.

1M/6M Trends: Neutral/Bearish

Technical Score: 1/10

OptionsPlay Score: 85

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Investment Rationale

With Netflix Inc. (NFLX) being a dominant player in online streaming, this is a pivotal moment, as it is currently trading at 75% lower than its peak. By looking at the long-term chart since its IPO, NFLX has traded in a well-defined channel, and it is now trading towards the bottom of this channel, from where it is now starting to bounce higher off the $170 level. The first major resistance level is only at the $240 level. As NFLX is currently trading at around 15 to 16 times next year’s earnings, this stock is well-priced and it is a good place to start buying at this level.