Options traders are bullish on Netflix before earnings. This is the same group that bought GameStop at $400 because a teenager posted a rocket emoji.
Betting on a comeback quarter. That's what we're calling it now. Not gambling on a coin flip. Not lighting money on fire with extra steps. A comeback quarter.
Netflix reports Thursday. The options flow says up. The options flow also said to buy Peloton, Zoom, and every SPAC with the word "tech" in the prospectus. The options flow has the market timing ability of a goldfish with a dartboard.
Streaming giant. That's the phrase they use. As if Netflix invented watching television on a screen. Revolutionary stuff. What's next, a comeback quarter for companies that sell food?
Here's the bullish thesis: people who trade options for a living looked at Netflix and decided it goes up. These are the same people who thought Rivian was worth more than Honda. The same people who discovered put options existed about fifteen minutes after their portfolio went to zero. The same people who think implied volatility is a rapper.
Decidedly bullish tone. Not just bullish. Decidedly bullish. They decided. They looked at the charts, ignored the charts, bought calls anyway, and declared it analysis.
The streaming giant reports earnings in three days. The options traders are positioned. Their accounts are leveraged. Their conviction is unshakeable. Their understanding of price-to-earnings ratios is theoretical at best.
They're betting on a comeback. From what, nobody mentions. Maybe Netflix went somewhere. Maybe it died and nobody told me. Maybe comeback just means "not down as much as my portfolio."
Thursday comes. Netflix either beats or misses. The options either print or expire worthless. The traders either win or explain why implied volatility crush is actually bullish if you think about it.
Photo by Thibault Penin on Unsplash
Leave a Comment