Streaming giant Netflix (NFLX) has had a big increase in competition in the past two years. But that hasn’t stopped one trader from making a hugely bullish bet on the company.
That’s based on the June 2022 $950 calls. That strike price is about 85 percent higher than where shares currently trade. The buyer paid about $8.10 for the contract, which expires in more than 450 days. Over 6,000 contracts traded, a 39-fold jump from the open interest of 154.
Netflix has seen a 42 percent rise in the past year, actually underperforming the S&P 500. Revenue growth is solid at 22 percent, and shares are trading at 53 times forward earnings.
- Man Who Predicted 2008 Crash: “The Mother of All Crashes is Coming”
If you've watched the movie The Big Short,you've heard of Michael Burry. He was one of the few who no only predicated the 2008 crash but profited from it.
He made $750 million for his investors and $100 million personally when his bet against the housing market paid off. His next big prediction?
He's warning the "mother of all crashes" is coming.
If you have any money in the markets, I urge you to click here and get the exact day of the next stock market crash.
That’s a bit of a stretched valuation, but if the company can come up with a successful initiative to boost its share price, long-dated call options could end up exploding higher. Shares have also traded close to $600 in the past year, so an attempt to break to new highs could be bullish for call options bought now as well.
Action to take: This is an inexpensive trade, as it is dependent on a big move higher. Traders looking for a potentially large return on a big jump in shares may want to get on board. Traders looking for a higher likelihood of the trade working out and who are willing to pay more upfront for that lowlihood should look at options with a lower strike price.