New Options Trading Offers Insight into Netflix’s Potential
Exploring Opportunities in Netflix Options Amidst Current Prices
Investors in Netflix Inc (Symbol: NFLX) have new options available for trading that expire on April 17th. With 93 days until expiration, these contracts may provide an attractive opportunity for sellers of puts and calls, potentially yielding higher premiums compared to contracts with shorter timeframes. Our YieldBoost formula has identified one put and one call contract that stand out in the new April 17th options chain.
The put contract with a strike price of $835.00 currently has a bid of $55.00. If an investor chooses to sell this put contract, they commit to purchasing the stock at $835.00 while also collecting the premium. This brings their effective cost basis for the shares down to $780.00 (before commission fees). For those already interested in buying NFLX shares, this option provides a more cost-effective alternative than paying $839.88 per share today.
This $835.00 strike is approximately a 1% discount to the stock’s current trading price, meaning it is out-of-the-money by that same percentage. Analysis shows there’s a 58% chance the put contract could expire worthless. Stock Options Channel will monitor this probability over time, publishing a chart of these figures on our website. If the contract expires without being executed, the premium could deliver a return of 6.59% on the cash commitment, or 25.86% on an annualized basis—a scenario we refer to as YieldBoost.
Below is a chart showing the trailing twelve-month trading history for Netflix Inc, highlighting in green where the $835.00 strike price stands relative to that history:
Covered Calls Show Potential Growth at Higher Strike Prices
Turning to the calls side of the options chain, the call contract at the $860.00 strike price currently trades with a bid of $56.00. If an investor buys NFLX stock at the current price of $839.88 per share and sells this call as a “covered call,” they commit to selling the stock at $860.00. Including the premium, this strategy could yield a total return of 9.06% if the stock is called away at the April 17th expiration (before commissions).
However, potential gains might be capped if NFLX’s stock price rises significantly, making it important to analyze historical performance and company fundamentals. Below is a chart depicting Netflix’s trailing twelve-month trading history, with the $860.00 strike highlighted in red:
The $860.00 strike represents roughly a 2% premium to the current trading price, meaning it is also out-of-the-money by that percentage. There remains a 48% chance that the covered call contract could expire worthless, allowing the investor to retain both their shares and the premium collected. Stock Options Channel will track these odds over time and present a chart detailing this data on our website. If the covered call expires worthless, the premium could yield a 6.67% extra return to the investor, which annualizes to 26.18%, and contributes to what we call YieldBoost.
The implied volatility for the put contract stands at 40%, while the call contract’s implied volatility is at 37%. In contrast, our evaluation of the trailing twelve-month volatility, calculated from the last 250 trading day closing values along with today’s price of $839.88, is 29%. For additional options contract ideas, be sure to visit StockOptionsChannel.com.
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Also see:
• AEN Historical Stock Prices
• Funds Holding DST
• NCS shares outstanding history
The views and opinions expressed herein are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
