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Great move higher in NFLX, and it’s seeing 2nd day followthrough.
This has the potential to drift higher, but odds are it won’t rip higher. There’s a clear resistance level (several actually) as we head into the mid 400’s.
An income calendar makes sense here. Implied volatility is pretty low as earnings are already out of the way.
This is a SCALING calendar, meaning we’re putting on 1/3rd size right now.
Buy to open NFLX Mar/Apr 420 put calendar for 5.30. Buying all the way up to 5.50, but you don’t really have to force yourself into the trade.
Will add to the trade if NFLX trades up to 450 or down to 410.
NFLX is right at breakeven or at a slight profit (depending on entries) and the stock is up at 445. The reason the position isn’t getting hit hard from the stock movement is that the other changes in option value, namely vega (and term structure) are helping the position.
It’s time to add to the trade as we are close enough to the adjustment point to add here.
Buy to open NFLX Mar/Apr 450 put calendar at 5.40
This will increase capital, increase max risk, increase rewards (but decrease on a %age basis), and increase odds.
Next add will be if NFLX moves to 470 or 400.
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