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Why Netflix earnings will probably rock the stock

Netflix earnings bombshell coming?

Netflix is set to report earnings after Monday's bell, and the impact on the stock could be huge. Options prices imply that traders expect Netflix to move some 10 percent off of the news.

While that might sound big, the estimate is actually lower than history would imply. Over the past eight quarters, the stock has averaged a 22 percent move off of earnings.

"This stock is off-the-chart volatile," said Mike Khouw of DASH Financial.

This year alone, the stock has enjoyed two huge rallies off of the company's earnings reports—rising 42 percent in January and 24 percent in April. And in fact, if the stock does move the expected 10 percent off of earnings, that would be the second-smallest move in the past two years, behind only July's 3.5 percent post-earnings slide.

So why does Netflix tend to move so much off of its quarterly reports?

"Because there's no way to channel check this stock," answered Oppenheimer analyst Jason Helfstein. While analysts tend to seek out information about a company from third parties such as store managers, suppliers or others who can help an analyst determine how a company is doing, that is simply not possible in the case of Netflix.

"There's no talking to customers, nothing like that" Helfstein said. "So nobody knows what they're going to print." The analyst rates the stock "perform" with a target of $259.

(Read more: Icahn sale would hit Netflix stock: RBC's Mahaney)

Victor J. Blue | Bloomberg | Getty Images

Wedbush Securities analyst Michael Pachter makes the point that it's not its earnings and revenue numbers that interest Netflix investors every quarter.

"There's nothing special about their earnings," Pachter said. "It's just been their subscriber numbers. They've been able to grow more than suspected, and they've been winning investors over with their promise that they're going to be bigger than HBO."

In other words, "it's a story stock," he told CNBC.com. And so far, the quarterly growth in subscriber numbers has been advancing the story nicely.

(Read more: Sony-Netflix strike production deal for an original series)

But Pachter is not a believer. "The story is that they're going to grow to 40 to 60 million domestic subscribers, have tons of pricing leverage and raise prices whenever they feel like it, and those subscribers will pay whatever Netflix charges," while content creators won't demand more money for the content that is the lifeblood of the company's business.

"That sounds so stupid to me," Pachter said flatly. He has an "underperform" rating and a $140 target on the stock, which opened Monday at $343.

On average, analysts expect the stock to report earnings of 49 cents per share on $1.1 billion worth of revenue.

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

Follow "Options Action" on Twitter: @CNBCOptions.

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