NFLX was scheduled to release earnings after hours today. I created a spread today: long NFLX 215 put, short NFLX 220 put, expiring in 4 days, cost: $4.35/pair. If NFLX stays above 220 by this Friday, my potential profit is $0.65/pair.
Reasoning:
- Bullish market
- Bullish NFLX chart, the 50 day SMA is at 225 (i.e., a strong support at 225).
- NFLX has to drop more than 10% for me to start losing money on this trade. (220 is 12% ITM: NFLX price of (251.67 – 220) /251.67 x 100%=12.6%). The odds are that NFLS is much more likely to be above 220.
About admin
Richard Cheng, M.D., Ph.D., is an avid Wall Street investor with 20+ years of investing experience. He is specially adept at observing the world to find the patterns and then design strategies to win his battle. Most, if not all, happenings in the world, follow certain patterns. These patterns may be complex, multi-factorial, not so intuitive at the first glance, or even may appear chaotic. However, even chaos has its own patterns. If you pay attention and be patient, you'll find them and then you will gain an upper hand in your battle. Using this blog space, he documents his trades and his thoughts as they happen. He uses this blog as a a notebook to help him better refine his strategies. Hopefully this will help you as well. Good luck in your trading.
