An options strategy Netflix Inc.’s stock known as a straddle on is priced Tuesday for a much bigger than usual one-day move after the streaming video giant reports second-quarter results after the closing bell. A straddle is a pure volatility play in which bullish (calls) and bearish (puts) options with at-the-money strikes and expirations at the end of the week are purchased simultaneously. Straddles are currently priced so buyers will start making money only if the stock moves at least $27.45 in either direction on Wednesday, according to data provided by Matt Amberson, principal at Option Research & Technology Services (ORATS), which is about 45% greater than the average move of $18.97 over the past 12 quarters. A move of $27.45 would equate to a 13.8% move at current prices. Keep in mind that the stock tumbled 35.1% the day after first quarter results and 21.8% the day after fourth-quarter 2021 results. Netflix shares have declined the day after 10 of the past 12 quarterly reports. The stock, which rallied 4.4% in afternoon trading, has tumbled 42.9% over the past three months while the S&P 500 has lost 12.2%.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.
0
0