The next episode in Netflix

I am a customer of $NFLX (currently watching season 1 of Breaking Bad, booyah). I have a trade on currently for November and thought I would post a summary along with an update and a few scenarios of how it can play out.

A summary:

  • I am short the November 72.5 Put at 2.05
  • I am long the November 80/85 Call Spread (4.80/3.10)
  • I was long the November 2 weekly 72.5 Put (.30) but it expired worthless. It was to protect the short November Put.

Here is where each piece stands today:

  • November 72.5 Put is going for 1.03
  • November 80 Call is going for 2.60
  • November 85 Call is going for 1.09

I need to get as much value for the $80 Call as I can given it is the only premium that I am long. These options expire next Friday so Theta will start coming in to play next week.

Here are a few scenarios:

  1. Price stays right here, decay works on all the pieces. I sell the $80 Call for what I can get late next week. Other pieces expire worthless.
  2. Price jumps above $80 by late next week. Same as above on unwinding as long as price stays under $85.
  3. Price falls to $75 by late next week. Won’t get much for the $80 Call. Would let short pieces expire, keep all the premium sold.
  4. Price falls under $72.5 strike. Would need to short stock to hedge this if it occurs. Call spread expires worthless.