Netflix (NFLX) 11/17/09 PriceWatch Alert Technicals Showing Bullish

Posted: Tuesday, November 17, 2009 8:27 AM EDT
By: Market Intelligence Center Staff

Netflix (NasdaqNM: NFLX) closed yesterday at $59.46. So far the stock has hit a 52-week low of $18.23 and 52-week high of $60.38. Netflix stock has been showing support around 58.53 and resistance in the 60.85 range. Technical indicators for the stock are Bullish. NFLX appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Jun '10 57.50 covered call (QNQ FU) for a net debit in the $50.96 area. That is also the break even stock price for this trade. This covered call has a 214 day duration, provides 14.30% downside protection and a 12.83% assigned return rate for a 21.89% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the NFLX Jan '11 35 Call (OOJ AG) and selling the Jun '10 57.50 call (QNQ FU) for a $17.90 debit. The trade has a 214 day life and would provide 11.03% downside protection and a 25.70% assigned return rate for a 44.00% annualized return rate (for comparison purposes only). Netflix does not pay dividends at this time. [ATU-Seven Summits Research]