DailyPlay – Opening Trade (NFLX) – August 18, 2023

NFLX Bearish Opening Trade Signal

View NFLX Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 1 Contract Oct 20th $415/$360 Put Vertical Spread @ $21.60 Debit per contract.

Total Risk: This trade has a max risk of $2,160 (1 Contract x $2,160) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $2,160 to select the # shares for your portfolio.

Trend Continuation Signal: This stock is bearish to neutral and is expected to break below a level of support.

1M/6M Trends: Bearish/Neutral

Technical Score: 9/10

OptionsPlay Score: 120

Stop Loss: @ $9.35 Credit (50% loss).

Entering the Trade

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

Please note that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

We quickly received confirmation of our head & shoulders neckline break on NFLX after just 2 trading sessions. If you missed out on the initial trade to play for the breakdown, now is another lower risk opportunity to get into the trade. For those who did jump in on the first trade, here is an opportunity to turn a small win into a potentially much larger win by adding further exposure in the position. I’m looking to Buy the Oct $415/$360 Put Vertical @ $21.60. With a hypothetical portfolio of $100,000 this would be 1 Contract for a total risk of $2,160 and bring our average cost on the 2 contracts to $18.67. I would also raise our stops to 50% of the average premium for $9.35 Credit. Our mandate with any trade is to cut losses quickly when an idea doesn’t work out and keep losses small, and reach our goal of being profitable by adding exposure in winning positions to potentially hit home runs. We currently have 3 open positions where we’ve added to it as it’s proven out to be correct, UPS, WHR and now NFLX. If even 2 our of these 3 trades reach our final targets, the total gains on these trades will add up to the largest month of profits we’ve had in the DailyPlay portfolio this year. Happy Trading and have a wonderful weekend!

NFLX – Daily