NFLX earnings spread

[heiasafari]

Good afternoon,

here is a spread I see in NFLX to play its earnings:

+1 jul27 72.5 PUT
-4 jul27 70.0 PUT
+3 aug17 60 PUT

I am putting links to the images so you can see better...

but it seems to pay minimum 8% as long as NFLX stays above 66.84, thats below the implied move (±11.75).

its a buffer of (66.84/81.82) -1 = -18.31%

graph @T0 (friday eod): http://screencast.com/t/xkVQJqxVii

graph @T+4 (assuming a drop in IV of 13): http://screencast.com/t/Wt56qrMC

Am I not seeing something?

 

[RichardRimes]

pretty clever...how is the volume on the weekly's?

 

[heiasafari]

Quote from RichardRimes:

pretty clever...how is the volume on the weekly's?

liquidity is no problem, especially with earnings this week

 

[atticus]

Looks decent. Is the $200 credit marketable?

 

[cdcaveman]

how come i remember Netflix getting killed.. to much downside risk for me on this trade.. pretty girl turns ugly quick! who knows though that seems really good if your not worried about large downside risk.. is there a name for that spread.. Crashing butterfly? haha

 

[cdcaveman]

you know another thing to look at is.. netflix i have seen move big time... you can put a ratio backspread and get a credit for betting on a big move down...
i can get a .20 cent credit right now for selling a 65 and buying 2 60's seems like a deal to me.. max risk 500 bucks.. collecting 20 bucks with a unlimited profit profile.. what do you think? combined with a butterfly?


<a target='_blank' title='ImageShack - Image And Video Hosting' href='http://imageshack.us/photo/my-images/88/netflixwrangle.png/'><img src='http://img88.imageshack.us/img88/3844/netflixwrangle.png' border='0'/></a><br>Uploaded with <a target='_blank' href='http://imageshack.us'>ImageShack.us</a>


<a target='_blank' title='ImageShack - Image And Video Hosting' href='http://imageshack.us/photo/my-images/39/netflixbutterfly.png/'><img src='http://img39.imageshack.us/img39/8053/netflixbutterfly.png' border='0'/></a><br>Uploaded with <a target='_blank' href='http://imageshack.us'>ImageShack.us</a>

 

[atticus]

CD, I'd go with the 75/80P long backspread. Either way, the shares will be up or down more than 5 handles, IMO.

 

[cdcaveman]

yeah well i went with the ratio.. i'm thinking about aapl earnings right now.. i think i'm going to credit spread it with apple

 

[diaoptions]

I'm bullish on NFLX, $100.00+ after earnings.

 

[cdcaveman]

Yea that's tomorrows trade
.. I was focused on aapl today.... I'm gonna put more trades on Netflix... do you profile open interest at all in your decisions to pick strikes?