HAL9000
Giá lên

NFLX: Play the earnings on the long side

NASDAQ:NFLX   NETFLIX, INC.
Beautiful uptrend in NFLX             continues, supported by excellent fundamentals. This is one of my growth stocks of choice. If you own it, you have made the right choice. If you don't, it's not too late.

BUY JAN 26'18 $235 CALLS to get exposed synthetically. This provides full upside exposure with no risk of downside if the stock tanks on disappointing earnings . Should the stock go down on earnings , the resulting volatility pickup should allow you to sell an OTM put to make up for your lost call premium. Or just lose your call premium and move on. I paid $4.50 for the calls. Against this cost, I have unlimited upside, which is the kind of Risk/Reward I like.
Bình luận: With the stock up some +13% after hours and post earnings release, the calls are in the money by some $15 against an initial investment of $4.50 - This is an effective reward/risk ration of 3.3x. Quite a successful trade for now. Let's see how we unfold this tomorrow during trading hours.
Bình luận: Sold the calls yesterday to close the position during the trading session at $17 against a purchase price of $4.50 the previous day. This is a return of 277% for an effective R/R of 3.8x.
Đóng lệnh: đạt mục tiêu
I want to buy a put, but how much liquidity do I need in my account.
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HAL9000 bboyroxas101
@bboyroxas101, You should only need the cash to pay for the put premium. But better check with your broker.
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@HAL9000, if I buy a put at around 225, with an expiration a month out. Is that outside of the money? Sorry, I new to options still.
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HAL9000 bboyroxas101
@bboyroxas101, This would be out of the money. You would do this if you expected the stock to fall.
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@HAL9000, @HAL9000, I think I am beginning to understand, I have an example I would like to use. If I sell a put, this is a bullish play and it does not matter what strike price I am at when the option expires. Correct?
The max profit is met whether I am 1 dollar or 5 dollars in the money. So if I were to sell a put on lets say, I wanted to sell a put on OSTK AT 81 the max profit is 8100.00 for 1 option. How much money do I need in my account? Also if it is over the strike price of 81 at expiration do I profit the full amount?
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Hi Hal! Can you explain how options work, please?
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