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The Schwab Network recently discussed an "example" options trade involving Netflix (NFLX). According to the network, the trade is "neutral to bullish" and takes advantage of the stock's expected high volatility in the wake of its earnings.
The company is expected to deliver its first-quarter results after the market closes today.
Photo by Thibault Penin on Unsplash
Rick Ducat, Schwab's Lead Market Technician, examined the technicals of NFLX stock.
A Potential Options Trade
Traders can sell the $900 put that expires on April 25 and buy the $875 put that expires on the same day, said Tom White, Netflix's Senior Options Contributor.
Traders who follow the "neutral to bullish strategy" would collect net premiums of $5 and have an $895 break-even point, White reported.
Ducat's Technical Analysis
NFLX has pushed above its 21-day and 63-day moving averages, both of which are "around $934," Ducat said. Moreover, its Relative Strength Index has broken above 50, which separates high-momentum stocks from low-momentum ones, he reported.
"The next area to watch" for NFLX is "around $1,000," Ducat said, adding that retaining the latter level could pave the way for it to reach $1,064, its all-time high.
On the downside, key levels include $950, $934, and $825, with the latter point representing a "double bottom," Ducat stated.
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Disclosure: None. This article is originally published at Insider Monkey.