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Investors 'Darken Picture' for Netflix

Stock and options trading turned bearish on Netflix today as investors worry about potential competition from online streaming giant YouTube.

Aggressive put buying drove options volume in NFLX to twice the average level as investors looked for downside over the next 2.5 weeks. OptionMonster's systems detect unusual activity in puts at the September 42.50, 40, 37.50, and 35 contracts. Volume was below open interest in all the strikes, but the orders reflected retail-sized buying.

NFLX has fallen 4.26 percent to $40 this morning and is down 11 percent in the past month. YouTube, owned by Google, is talking to studios including Lions Gate Entertainment about offering a paid streaming-movie service, according to the Wall Street Journal. If an agreement emerges, it could represent significant competition for Netflix.

NFLX reported better-than-expected second-quarter profit on July 23 and raised its full-year guidance. The company is also scheduled to participate in Citi's Global Technology Conference at 9:50 a.m. ET on Sept. 9 and the Deutsche Bank Securities Technology Conference at 11:35 a.m. ET on Sept. 16.

Overall options volume in NFLX today is more than double the average level, with puts outnumbering calls by 2 to 1.

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David Russell is a reporter and writer for OptionMonster.

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