12:15pm (EST)
Shares of Netflix (NFLX, $340.95, down $40.04) continue to defy gravity but after an initial pop at the open, shares are reversing course despite a fantastic earnings report.
The company reported a profit of $0.52 a share on revenue of $1.1billion. The suit-and-ties were expecting a profit of $0.49 a share on sales of $1.1 billion.
The options were a little too pricey for us to take a trade into yesterday’s close and although we did take a peak, we sat on the sidelines as we have a number of other earnings trades in play. However, buying put option at the open instead of call options would have been a jaw-dropping trade.
Netflix shares closed Monday’s session a penny under $355 and opened this morning at 7 pennies under $388. The high was just north of $389.
As you can see from the Yahoo Finance quote below, the November 325 puts (NFLX131116P00325000, $10.90, down $2.80) OPENED this morning’s session at $1.23 and are currently north of $10.
It would have taken some courage to short the stock at the open bit that is what the pros were doing. The rookies were buying Netflix on the opening pop on hopes shares would surge past $400 but that didn’t happen and the momentum is fading.
A 10 contract trade would have cost $1,250 had you bought the November 325 puts on the open and at current levels they could be cashed out for $10,900! The return would be 775%. Not bad for less than 3 hours work.
The market is also pulling off its highs but is still in the green. The Dow is up 64 points to 15,457 while the S&P 500 is higher by 8 points to 1,752. The Nasdaq is gaining 7 points to 3,926.
We have another Profit Alert on a trade that is up 130% so let’s go ring the register on at least half to lock-in another triple-digit winner!
Subscribers, check the Members Area for the updates and stay close to your email inbox has we could have additional Profit Alerts or New Trades as there is a put position we are researching.