DailyPlay – Netflix (NFLX) – October 18th, 2021

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Market Outlook:
Equities finished on a strong note to end the week with back-to-back gaps higher and closing near the highs of each day. With momentum turning positive and a break above $440 resistance on SPY, this looks constructive for equities overall, However, there are signs of short-term exhaustion and risks a pullback next week if corporate earnings fail to deliver significant beats. The bond rally additionally took a pause on Friday, with TLT holding its $146 resistance level suggesting a potential selloff next week and rise in yields, pressuring equities lower. 

NFLX Bullish Earnings Idea:
Our bullish earnings play for this week is Netflix (NFLX). Netflix recently broke out above its 4-month trading range of $475-575 with strong relative outperformance to its sector XLC. This momentum and relative strength are constructive into a pivotal quarter for the streaming giant. With the success of Squid Games, we expect to see higher than average subscription rates and lower churn. With its high price, we seek a creative way to seek upside exposure into earnings, while risking less than 1% of the stock’s price using a broken wing butterfly. 

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