Knife Catch in NFLX

[Steven Place]

The stock is oversold and coming into key support levels. It could fill that gap, but not overnight.

Sell to open May 345/340 put spread for 1.85 or higher (price has been fluctuating as high as 2.20)

Adjust under 350

[Steven Place]

Nasty, nasty move in NFLX. This sometimes happens with our bull put spreads, expecially when I call the trade a “knife catch.”

What we will do now is roll the spread to lower strikes. This is known as a “condor roll” and will increase our odds in exchange for less reward and more risk.

Here’s the trade:

Buy 345/340 320/315 put condor for .75.

Here is the thinkorswim ticket:

BUY +1 CONDOR NFLX 100 MAY 14 345/340/320/315 PUT @.76 LMT

Now.. if you can get filled on this trade outright that’s great, but you may need to break it up. To do that, you will have 2 separate trades:

Buy to close May 345/340 bull put spread

Sell to open 320/315 bull put spread

I now have a hard stop at 318, which is just under major support from January.

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