Options Target Netflix on Share Price Action

Stock and options trading turned bullish on Netflix Monday, as investors positioned for the movie-rental company to rally this week.

OptionMonster's tracking systems detected heavy activity in the July 42.50 calls, with volume surging to 6,428 against existing open interest of 1,758 contracts. The calls were bid up from an opening print of $0.19 to a high of $0.94 at the same time the shares rose on heavy volume.

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NFLX stock climbed 4.75 percent to $41.97 in early afternoon trading. The calls purchased today will expire worthless unless the stock closes above $42.70 by Friday.

The stock soared earlier this year on strong subscriber growth but has fallen 15 percent in the last three months after its outlook on April 23 failed to meet some lofty expectations. Since then the stock has found support around an old high around $38, apparently prompting some traders to bet on a resumption of its upward trend.

Traders are probably also betting on strong results when NFLX reports second-quarter earnings after the bell on July 23. The July 45 calls were also active, changing hands 1,430 times for $0.01 to $0.20 against open interest of 1,212 contracts.

Options volume in the name was more than triple the average, with calls outnumbering puts by 3 to 1.

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David Russell is a reporter and writer for OptionMonster.