Unusual Options Activity: Netflix (NFLX)

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  • Traders up bearish bets after subscriber miss.

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  • Put option trading in streaming giant Netflix (NFLX) saw a surge after reporting earnings Wednesday after the bell. Although the company missed on its total subscriber count for another quarter, and although the company has burned through nearly $10 billion in cash in the past few quarters, shares still managed to gain nearly 3 percent in trading, sending some traders to make bearish bets.

    One interesting bet is the October 25th $297.50 put.

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    With shares just under $296, the trade is slightly in-the-money ahead of expiration next week, and should move dollar-for-dollar with shares if they decline following their earnings. With shares of Netflix closer to their 52-week lows rather than highs, however, it’s a tough bet to make.

    Action to take: Skip the short-term bearish bets. With a number of companies getting into the streaming space this year, shares of Netflix also have limited upside. Investors should skip the shares until the company’s cash flow isn’t so negative.

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  • Traders looking to go short would be better off with the June 2020 $250 puts. They’re a bit pricier than the October options, as they trade at $15.50, or $1,550 per contract. However, they’re  a better bet on 100 shares of the company continuing to decline in the months ahead rather than a roll of the dice on the next few trading days.