Large Option Trader Aggressively Dumping Netflix Calls
Netflix Inc (NASDAQ: NFLX) shares tanked towards the end of this week as some negative headlines have rattled investors. Some large option traders were aggressively dumping Netflix calls on Friday as investors begin to focus on the launch of the Walt Disney Co (NYSE: DIS) streaming service in November. On Friday morning, Benzinga Pro subscribers received 11 option alerts related to unusually large Netflix trades. Looking at the series of six trades that took place within a two-minute stretch, each trade was executed at a lower price than the last, suggesting even the trades that took place at the midpoint likely represented the same trader attempting to exit a large position. Assuming all six trades were sales, the six trades represented a total sale of 4,485 Netflix call options, or a total bearish bet worth nearly $4 million that Netflix shares will be trading below $291.60 this time next month. Even traders who stick exclusively to stocks often monitor option market activity closely for unusually large trades. In addition, Bernstein analysts said this week that “taking the lower of: a) current multiple (33x EBITDA), or b) 2 std deviations below average (4.5x Sales), decreasing our EBITDA forecast by 10%, the theoretical ‘floor’ for NFLX would be $230.”. While there were also four large bullish Netflix put sales on Friday morning as well, the series of call trades stood out the most because they were almost certainly coming from the same seller.