Netflix stock options traders are ready for a big move after earnings

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Netflix stock options traders are ready for a big move after earnings
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Netflix stock-options traders positioning for a big move after earnings report

Netflix’s stock NFLX, -1.56% has been on a roll this year, as many see the company as a beneficiary of stay-at-home and other lockdown measures put in place to combat the COVID-19 pandemic. Investors get a peek into how much the company has actually benefited when it reports second-quarter results after Thursday’s closing bell.

One way to gauge expectations on how much a stock is expected to move in reaction to earnings is through an options strategy known as a straddle, which involves the simultaneous purchase of one bullish and bearish options with strikes around current, or “at-the-money” prices, that expire at the end of the week.

As of Thursday morning, Netflix options implied a 12.8% move in either direction on Friday, according to Garrett DeSimone, head quant at OptionMetrics.

 

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