Netflix Earnings Trade – Why we trade options

NFLX earnings trade

netflix lgog

Yesterday we wrote about our Netflix earnings trade where we purchased $NFLX $125 Weekly calls to take advantage of a possible large move. The 120/125 weekly strike was on our 3-4 position watch-list both Tuesday and Wednesday. We posted our entry via the chatroom, twitter and our forum:

NFLX - Netflix 

Grabbed 125 Weekly calls @ .12/.15 for earnings after hours. Extremely risky, just think we have some dejavu and she breaks 20%

This is what we were saying in chatroom:

2013-01-23 10:38:52 AM XXXX $NFLX 125 lotto C for earnings @ .12

2013-01-23 03:39:59 PM xxxx jb, you holding them overnight? knowing you, prob yes

2013-01-23 03:41:26 PM XXXX yes i am a glutton for punishment
2013-01-23 03:41:40 PM XXXX If I was smart i would sell half but i am not happy with 100-200% sometimes ~
2013-01-23 03:42:32 PM XXXX when i bought it was a lotto and that was my goal to hold, not changing

This was our trade yesterday:

01/23/2013 10:38:25 Bought 5 NFLX Jan 25 2013 125.0 Call @ 0.12
01/23/2013 10:38:25 Bought 5 NFLX Jan 25 2013 125.0 Call @ 0.12
01/23/2013 10:38:25 Bought 4 NFLX Jan 25 2013 125.0 Call @ 0.12
01/23/2013 10:38:25 Bought 5 NFLX Jan 25 2013 125.0 Call @ 0.12
01/23/2013 10:41:22 Bought 5 NFLX Jan 25 2013 125.0 Call @ 0.13
01/23/2013 10:43:33 Bought 7 NFLX Jan 25 2013 125.0 Call @ 0.15
01/23/2013 10:44:49 Bought 2 NFLX Jan 25 2013 125.0 Call @ 0.17
01/23/2013 10:44:49 Bought 2 NFLX Jan 25 2013 125.0 Call @ 0.17
01/23/2013 10:44:49 Bought 1 NFLX Jan 25 2013 125.0 Call @ 0.17

 

At the end of the day yesterday those calls were up 150% and we still held. It was a gamble, but sometimes those with the iron gonads come home with the prize. This morning we reviewed our strategy for exit via our watchlist and live audio in the chatroom before the open putting in a limit @ $20 then $22, then closed the first batch @ $18 and then 20 minutes later the rest at $23.80 (.20 off  the HOD for the strike):

Filled Sell to Close 11 NFLX Jan 25 2013 125.0 Call Limit 23.80 -- -- 09:52:43 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 23.80 -- -- 09:52:43 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 23.80 -- -- 09:52:43 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 23.80 -- -- 09:52:41 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 23.80 -- -- 09:52:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:42 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 1 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 2 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:41 01/24/13
Filled Sell to Close 3 NFLX Jan 25 2013 125.0 Call Limit 18.00 -- -- 09:30:40 01/24/13

 

So 30 minutes into todays trading our calls from yesterday purchased for $483 netted us $75,280.

Just shows you the power of options. If you think this trade is a fluke we suggest you search our site for some similar trades on CMG, CME, PCLN, LNKD, SINA, and other stocks. Here are the recent ones from $NFLX : http://www.optionmillionaires.com/2012/disneydis-sprinkling-some-pixie-dust-on-netflixnflx-calls/

These trades do not happen everyday, and trading a very risky instrument like stock options ,trying to catch a move like this will result in your account being decimated. But options also allow you to risk less capital with possible high rewards. We currently hold some Netflix (NFLX) $150 calls and expect the stock to clear $150 tomorrow.

Happy Trading!

- Jimmybob

 

JimmyBob (Scott)has been trading equities for over 15 years, a majority of which were OTC micro-cap stocks. He started trading high risk stock options over the past 7 years, and has proven winning trades in excess of 15,000%.

As one of the Co-Founders of optionmillionaires.com, Scott enjoys sharing his knowledge with other investors through timely blog posts, daily watch lists in the forum, weekly webinars, and helpful advice within the chatroom.

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