Carter Worth And Mike Khouw's Netflix Trade Going Into Earnings
On CNBC's "Options Action," Carter Worth shared with the viewers his bullish technical analysis of Netflix (NASDAQ: NFLX). He said the stock jumped 128% from its 2019 lows, but in the last six months has been trading sideways. He expects the stock to break out from the range and move higher as the company keeps performing well and buying back shares.
To make a bullish bet, Mike Khouw wants to buy the July $560 call for $29.80 and sell the April $580 calls for $6.50. He wants to use a calendar spread because the near-term implied volatility is elevated and the three-month implied volatility is at its two-year low.
The company will report earnings on Tuesday and Khouw expects the stock to stay below $580 at the Friday expiration so he can collect the premium from the April call and keep owning the July call. The $580 strike is 6.12% above the closing price of Netflix on Friday.
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