Trade Review in Netflix – in progress

We are in the heart of earnings season so my trading focus tends to be in this area of my trading process. $NFLX was an important release after hours on 7/22 so I wanted to design a trade that allows me to participate in either direction.

Since I like flexibility in my trade design, I settled on the following trade:

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Here is a breakdown:

I am short the Aug 2w/July 26w 225 Put Calendar
I am short the July 26w 310 Call
I am long the Aug 2w 310/325 CS
This was done for a $5600 credit (25 contracts)

In after hours I shorted the stock for a nice 2.5% gain. Later in that session I went long as it came back up through the 245 level. I added a trail stop today, 7/23, which was hit earlier for a 4.5% gain.

As for the Option pieces, this is what I have done so far:

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BtC the short July 26w 310 Call for $.07
StC the long July 26w 225 Put for $.44
This added $.37 to my initial credit & freed up some margin

What remains & the plan:
I am short the Aug 2w 225 Put. Ride to expiration (or buy back if it gets real cheap)
I am long the Aug 2w 310/325 CS. Tighten the spread to 310/315 & take out more $

One thought on “Trade Review in Netflix – in progress

  1. Trade Adj: BtC Aug 02w 225 Put at $.93 which frees up the margin use. CS is what remains now. Later, StO Aug 2w 220 Put at 1.64 on the fade move to $245 again.

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