Options Traders Target Netflix
By: Netflix is seeing heavy options activity Thursday as its shares continue to rise, up nearly 3 percent on a day when the broader markets are selling off.
Only halfway through the session more than 20,000 NFLX contracts had already changed hands, dwarfing last month's average daily volume of 3,800, according to OptionMonster's tracking systems.
The short interest is high (about 28 percent) and the squeeze has likely exaggerated the move — but the March 50 calls bought for $0.20 do stick out as odd, as they are nearly $15 out of the money. This is certainly volatile and would likely dictate a high degree of caution in any trading.
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NFLX stock has run up $7 in just three days and doubled in the last two months, now trading at $37.18. This week's pop came after the company reported a 25 percent rise in subscriptions along with expectations of more growth for 2009, as more people opt for home entertainment to save money in this economic climate.
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Home Entertainers:
Apple
Blockbuster
Time Warner Cable
DirecTV
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.
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