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Kensho Stats

History shows you should wait to buy Netflix dip

 Netflix on a tablet
Daniel Acker | Bloomberg | Getty Images

History shows the top-performing and most-reliable trade after a huge single-day plunge in Netflix is to wait a month until the dust clears before scooping up the stock.

Buying one month after a slaughter like we're seeing Tuesday in shares of the streaming company and then holding for one year was a winning trade more than 80 percent of the time, yielding an average return greater than 110 percent, according to Kensho, an analytics tool used by hedge funds.

If you buy Netflix at the end of trading Tuesday, there is a close to even chance the stock will be lower five days and one month out from now, the Kensho study shows.

Using Kensho, we found there were 31 occasions over the life of Netflix as a public company when the stock dropped 10 percent or more in a single day.

First, we ran the numbers to find out what happened if you bought at the close of those disastrous days. Here are the stats...

Five days out and one month out, your average returns are measly and more importantly, your odds of being in the green are just about a coin flip.

The returns and odds of being positive improve the further out you get, but they are not as good if you waited a month. See below.

Your odds of a successful trade are much higher for just about all the holding periods.

History is no guarantee of future results and this is not for the buy-and-hold crowd, but the stats show traders may want to sit on their hands before buying into this Netflix slide.

You'll get a better opportunity to buy without as much indigestion in August.

— CNBC's parent NBCUniversal is a minority investor in Kensho.