Ok, I have been a huge netflix fan all the way from $80 but today I decided to sell all my shares and buy puts. The stock simply cant get out of its own way after this earnings call. There is no way they can beatby enough to go higher. On top of that, todays sudden 180 turn to start a mail out only service seems desperate to me. My guess is the subscriber count is slowing and they are panicing. If not for this clue today Id stay long until earnings but this is the red herring that tells me theres something wrong. While Im not trying to pick the exact top, I can tell you that at some point next month the Aug $250 puts will be in the money and assuming Im right I will keep rolling into longer dated puts each month. I am saying its going back to $200 and maybe lower. Go ahead and tell me Im crazy but I already know Im crazy and you have to take gutsy ridiculous calls to win big on wall street. I have a excellent track record but Im not always right. If your right more than wrong you are doing well on wall street...
I've been a Netflix customer for a number of years, with 1 disc and streaming service. I didn't use the service a lot, maybe a few times a month, probably like most people. With this pricing move I will probably cancel completely. Neither service alone is worth what they're asking to me. I can just rent two or three things a month from Amazon for 2-4 bucks a pop and save money without being obligated to pay for a monthly service. I suspect a lot of other folks will use Redbox or do something else other than using Netflix now.
Now, as soon as I realized this, I thought I'd take a look at the stock. 90 PE...100 to 300 in the last year...and they're looking at losing a large number of customers. Yup, sounds like prime put buying territory to me. With a multiple like this they need everything to go right, and that's not what this looks like.
You may be very fortunate. Right now the markets are in panic mode. We will most likely trade all over the place based on news. If we get overwhelmed with bad news look out below. If it looks like things are not so bad we could rip to the upside. This will be a wild week for sure. Good luck. Personally volatility is what I like to see but some times it's best to stand aside.