New Options Trading Kicks Off for Netflix Investors
February 28th Options Highlight Potential Opportunities
Today marks the start of new options trading for Netflix Inc (Symbol: NFLX), specifically targeting contracts that expire on February 28th. Utilizing Stock Options Channel’s YieldBoost formula, we’ve pinpointed two notable contracts—one put and one call—that investors might find interesting.
The put contract at the $870.00 strike price is currently bid at $42.95. By selling-to-open this put, an investor agrees to buy shares at $870.00 while collecting the premium, effectively reducing their cost basis to $827.05 (prior to broker commissions). For those planning to buy NFLX shares, this might be a more appealing choice compared to purchasing them at the current market price of $874.99 per share.
This $870.00 strike price represents a roughly 1% discount from the stock’s current trading value, indicating it is slightly out-of-the-money. There’s a build-up of evidence suggesting a 57% chance that the put contract could expire worthless. As these odds fluctuate, Stock Options Channel will monitor and publish updated data on our website.
If the put expires without value, the premium would yield a 4.94% return on the cash commitment, translating to an impressive annualized return of 35.33%. This is part of what we refer to as the YieldBoost.
Below is a chart illustrating Netflix Inc’s trading history over the past twelve months, with the $870.00 strike price highlighted in green:
On the call side of the options chain, we see a call contract at the $890.00 strike price with a current bid of $45.20. If an investor were to buy shares of NFLX at the current rate of $874.99 and simultaneously sell the call as a “covered call,” they’d be agreeing to sell their shares at $890.00. With the collected premium, this could lead to a total return of 6.88% if the shares are called away at expiration on February 28th (excluding any dividends and broker fees).
It’s significant to note that if NFLX shares gain momentum, an investor may miss out on potential gains; thus, reviewing the stock’s twelve-month trading history and its fundamentals is crucial. The $890.00 strike price indicates around a 2% premium compared to the current stock price, keeping it slightly out-of-the-money as well. There’s a 49% chance this covered call could expire worthless, allowing investors to retain both their shares and the premium earned.
If the contract does expire worthless, the premium would boost returns by 5.17%, achieving an annualized return of 36.97%, another instance of our YieldBoost.
Both the put and call contracts feature an implied volatility of approximately 39%. However, our analysis of the trailing twelve months shows the actual volatility at 29%, based on the last 251 trading days and today’s share price of $874.99. For additional valuable put and call options ideas, be sure to check out StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
