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State Board of Administration of Florida Retirement System Has $206.64 Million Holdings in Netflix, Inc. (NFLX)
By: MarketBeat | November 25, 2023
• State Board of Administration of Florida Retirement System trimmed its stake in Netflix, Inc. (NASDAQ:NFLX) by 3.0% in the second quarter, according to its most recent Form 13F filing with the Securities & Exchange Commission. The firm owned 469,124 shares of the Internet television network's stock after selling 14,757 shares during the period. State Board of Administration of Florida Retirement System owned about 0.11% of Netflix worth $206,644,000 at the end of the most recent reporting period...
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$NFLX Gap almost filled and raging hot now... careful, prefer dip buys
By: Options Mike | November 19, 2023
• $NFLX Gap almost filled and raging hot now... careful, prefer dip buys.
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Netflix $NFLX CEO sold over $35M of stock last week
By: Markets & Mayhem | November 13, 2023
• $NFLX CEO sold over $35M of stock last week.
- When the market is pumping to highs and CEOS are selling, its never a sign that they think their shares are "undervalued"
NOT a sign to short, but something to keep records on!
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Netflix $NFLX Nice push up on Actors strike ending. Gap ahead @ 453.50 area
By: Options Mike | November 12, 2023
• $NFLX Nice push up on Actors strike ending. Gap ahead @ 453.50 area.
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$NFLX & $NVDA Bullish Tape So Far
By: Cheddar Flow | November 10, 2023
• $NFLX & $NVDA Bullish Tape So Far
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Netflix $NFLX Finally broke 420 and grinding higher now.. 450 and that gap next resistance
By: Options Mike | November 5, 2023
• $NFLX Finally broke 420 and grinding higher now.. 450 and that gap next resistance.
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Chairman Reed Hastings sold 16,030 $NFLX shares worth approximately $6.7 million this week
By: Barchart | November 3, 2023
• Netflix Insider Trading Alert
Chairman Reed Hastings sold 16,030 $NFLX shares worth approximately $6.7 million this week
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Netflix, Inc. $NFLX Total Debt (mrq) $16.76B w/ Book value of only $50.51 overbought by 800%
Netflix Inc. $NFLX Big report, nice growth, like it for more over 410
By: Options Mike | October 22, 2023
• $NFLX Big report, nice growth, like it for more over 410.
Do I believe this is sustainable? NO! This is due to the Strikes.. but play it til next report!
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Monster Day for Netflix $NFLX which is poised for its largest gain in almost 3 years and would get the stock back above its 200 and 50 Day moving averages!
By: Barchart | October 19, 2023
• Monster Day for Netflix $NFLX which is poised for its largest gain in almost 3 years and would get the stock back above its 200 and 50 Day moving averages!
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Netflix $NFLX Upgrades from brokerage firms
By: Evan | October 19, 2023
Morgan Stanley today upgraded Netflix $NFLX to Overweight from Equal Weight while raising its price target to $475 from $430
JPMorgan raised its price target on Netflix $NFLX to $480 from $455 while maintaining its Overweight rating
Goldman Sachs raised its price target on Netflix $NFLX to $400 from $390 while maintaining its Neutral rating
Truist upgraded Netflix $NFLX to Buy from Hold while raising its price target to $465 from $430
Keybanc upgraded Netflix $NFLX to Overweight from Sector Weight with a $510 price target
Oppenheimer raised its price target on Netflix $NFLX to $475 from $470 while maintaining its Outperform rating
Benchmark raised its price target on Netflix $NFLX to $350 from $325 while maintaining its Sell rating
Bernstein today raised its price target on Netflix $NFLX to $390 from $375 while maintaining its Market Perform rating
Deutsche Bank today lowered its price target on Netflix $NFLX to $460 from $485 while maintaining its Buy rating
MoffettNathanson today raised its price target on Netflix $NFLX to $390 from $330 while maintaining its Neutral rating
Rosenblatt raised its price target on Netflix $NFLX to $404 from $400 while maintaining its Neutral rating
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Netflix Paid Subscribers, Millions
By: Charlie Bilello | October 18, 2023
• Netflix Paid Subscribers, Millions
2023 (Q3): 247 (+11% YoY)
2022: 231
2021: 222
2020: 204
2019: 167
2018: 139
2017: 118
2016: 94
2015: 75
2014: 57
2013: 44
2012: 33
2011: 24
2010: 20
2009: 12
2008: 9.4
2007: 7.5
2006: 6.3
2005: 4.2
2004: 2.6
2003: 1.5
2002: 0.8
2001: 0.5
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Netflix shares surge on big subscriber additions despite Hollywood strikes
By: Investing | October 19, 2023
LOS ANGELES (Reuters) -Streaming pioneer Netflix (NASDAQ:NFLX) showed resilience by gaining more quarterly subscribers than in the past three years despite strikes by Hollywood's writers and actors, sending its shares up 14.5% on Thursday.
Netflix capitalized on its heft in global production, as well as the economic hardships of its media rivals, to garner 247 million subscribers in the third quarter, a gain of nearly 9 million over the last three months.
It was the greatest gain since the COVID-19 outbreak fueled unprecedented growth in early 2020.
Netflix shares rose to $396.20, putting them on course for the biggest one-day percentage gain in nearly three years, with the company on track to add more than $22 billion to its market capitalization.
"The management deserves an Emmy for managing investor expectations," Bernstein analysts wrote in a note, adding that paid-sharing has opened up a bigger-than-expected market of potential subscribers for Netflix.
Results from media rivals such as Walt Disney (NYSE:DIS), Paramount Global and Warner Bros Discovery (NASDAQ:WBD) will show the impact of the industry's months-long work stoppage, which began in May with strike by Hollywood's writers.
Members of the Writers Guild of America settled this month, though actors, who walked off the job in July, remain on strike.
U.S. broadcast networks filled their fall lineups with repeats and reality shows, while rival streaming services delayed releases and had less foreign-language programs than Netflix, which could produce in more than 50 countries and languages.
"Due to its large international presence, Netflix is positioned better than most entertainment companies in plugging programming gaps from the writers' and actors' strikes," said Insider Intelligence principal analyst Ross Benes.
"With original US productions delayed and other TV and streaming companies no longer holding exclusive titles with vise grips, expect Netflix to revert to its past when many of its biggest shows were licensed," Benes said.
A live-action adaptation of the Japanese manga series, "One Piece", which represented a collaboration between Netflix's U.S. and Japanese content teams, ranked as the top show in 84 countries - a feat that even the popular sci-fi series "Stranger Things" did not accomplish.
Meanwhile, the legal drama "Suits", which last aired on the USA Network in 2019, set viewing records when it landed on the streaming service in the summer, one of several television shows Netflix licensed from media competitors that are finding fresh audiences on Netflix.
"Because of our distribution footprint and our recommendation system, we are able to take 'Suits', which had played on other streaming services, and pop it right into the center of the culture in a huge way," Netflix Co-CEO Ted Sarandos said during Wednesday's investor video.
As talks between the union for actors and performers and major studios broke down last week, Sarandos saw parallels to how Netflix navigated "prolonged and pretty unpredictable production interruptions" during the pandemic.
"These are the times that I'm glad we have such a rich and deep and broad program selection," Sarandos said.
Still, Netflix is not free from strike disruptions. U.S.-based shows such as mega-hit "Stranger Things" are on hold until actors return to work.
Delays for some of its biggest shows are "problematic" for Netflix because "it doesn't have the same back catalog as Disney+ to fall back on", said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
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$NFLX Take profits here. Netflix has enormous debt Total Debt (mrq) $16.99B
NFLX FAKE BS BOOK COOKERS!!!!!!!!!!
Netflix (NFLX) stock is UP $38.24 or 11.05% after earnings report, as I post.
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Netflix $NFLX Just Reported Earnings:
By: Evan | October 18, 2023
• NETFLIX $NFLX JUST REPORTED EARNINGS
EPS of $3.73 beating expectations of $3.49
Revenue of $8.54B in line with expectations
Netflix added 8.76 Million new subscribers above expectations of 6.2M
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Earnings Reports: Netflix Inc. (NASDAQ: NFLX)
By: 24/7 Wall St. | October 18, 2023
• Here is a look at three earnings reports on the calendar for Wednesday afternoon.
Netflix
Shares of Netflix Inc. (NASDAQ: NFLX) have increased by nearly 57% in the past year. Analysts and investors were concerned that the company’s offering of an ad-supported subscription tier would weigh on revenue. That did not happen. In fact, revenue rose in each of the past two quarters and so have profits.
As always, analysts will be paying close attention to subscription growth, expecting the company’s crackdown on account sharing to produce even better results. The end of the writers’ strike may prod Netflix to raise its ad-free subscription rate for the first time since January of 2022.
Of 45 analysts covering the stock, 24 have a Buy or Strong Buy rating. Another 19 have Hold ratings. At a share price of around $361.00, the stock potential upside based on a median price target of $457.50 is 26.7%. At the high price target of $600.00, the upside potential is about 66.2%.
Third-quarter revenue is forecast at $8.54 billion, up 4.3% sequentially and 7.7% higher year over year. Adjusted EPS are forecast at $3.48, up 5.7% sequentially and by 12.3% year over year. For the full 2023 fiscal year, analysts expect to see EPS of $11.85, up 19.1%, on sales of $33.72 billion, up 6.6%.
Netflix shares trade at 30.5 times expected 2023 EPS, 23.9 times estimated 2024 earnings of $15.07 and 19.5 times estimated 2025 earnings of $18.50 per share. The 52-week trading range is $234.40 to $485.00. Netflix does not pay a dividend. Total shareholder return for the past 12 months was 56.88%.
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Netflix $1.5 Million Call Seller Looking to Collect Premium
By: Cheddar Flow | October 17, 2023
• $NFLX $1.5M Call Seller Looking to Collect Premium
*At the Bid*
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Netflix (NFLX) Stock Brushes Off Pre-Earnings Bear Notes
By: Schaeffer's Investment Research | October 16, 2023
• UBS and Guggenheim both cut their price targets on NFLX
• NFLX sports a 23% lead for 2023
Netflix Inc (NASDAQ:NFLX) stock is up 1.8% at $362.13 at last check, brushing off price-target cuts from UBS and Guggenheim to $500 and $460, respectively. This comes ahead of the streaming giant's third-quarter earnings report, due out after the close on Wednesday, Oct. 18. The stock is looking to stage a bounce from the $350 region after its September rejection at the $450 area. So far this year, NFLX is up 23%.
The security has a generally negative history of post-earnings reactions. NFLX finished five of its past eight next-day sessions lower, including an 8.4% drop in July. The shares averaged a move of 12.4% in the last two years, regardless of direction, with the options pits pricing in a move of 12.2% this time around.
Netflix stock has been garnering bearish attention ahead of its report. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX sports a 50-day put/call volume ratio that sits higher than 86% of readings from the past 12 months.
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Here's What Analysts Expect from Netflix Ahead of Wednesday's Earnings
By: Barchart | October 16, 2023
This hasn’t been the most fruitful year for Netflix (NFLX), even as most tech stocks have fared exceptionally well in 2023. Netflix’s stock has gained 21.9% year-to-date, while the benchmark Nasdaq Composite ($NASX) has risen nearly 30%.
www.barchart.com
In comparison, here’s how the other FAANG stocks have performed so far this calendar year:
• Meta Platforms (META), previously known as Facebook: up 165%
• Amazon (AMZN): up 56%
• Apple (AAPL): up 38%
• Alphabet (GOOGL), previously known as Google: up 57%
Valued at $157.61 billion, Netflix is the global streaming market leader. Inflation and rising competition in the streaming market have slowed Netflix’s growth in the last few quarters. Furthermore, it made some major changes this year, which has made some investors skeptical of its growth prospects.
However, despite the relatively slow growth, most analysts believe the stock has more upside - and the company appears to be optimistic for the remainder of the year. Even amid increased competition, Netflix still has a stronghold in the streaming business, with revenue up from $16 billion to $32 billion in the last five years.
Netflix Expects Growth To Accelerate Through Year-End
This year, Netflix made significant changes to its C-suite leadership. Ted Sarandos and Greg Peters were named co-CEOs in January, with Reed Hastings staying as Executive Chairman. Amy Reinhard took over as President of Advertising from Jeremi Gorman earlier this month. A sudden change in C-suite leadership usually tends to shake up the stock in anticipation of how the new management will affect the company.
In May, Netflix also announced its subscribers will be unable to share passwords anymore. It introduced paid sharing in more than 100 countries, charging an additional $8 monthly to add a member to your account. The company received a lot of backlash shortly after this decision, with the hashtag “CancelNetflix” trending on Twitter (now known as X).
While many expected this decision to result in more subscriber cancellations, Netflix announced in its Q2 results that it added 5.9 million globally. The streamer's total revenue was $8.2 billion, up 3% year on year, with $1.5 billion in net profit.
Management expects revenue to grow in the second half of this year, driven by the successful rollout of its paid-sharing launch in all the remaining countries, and continued steady growth in its ad-supported plan. Netflix expects revenue to be around $8.5 billion in Q3, which would be an uptick from $7.9 billion in the year-ago quarter.
The company anticipates generating $5 billion in free cash flow (FCF) this year. Management stated that the Hollywood writers' strike reduced cash content spending for 2023. Since the strike has ended, Netflix anticipates spending more on cash content while still generating significant positive FCF in 2024.
What Do Analysts Expect From Netflix’s Q3 Results?
Ahead of this Wednesday's earnings report, analysts predict that Netflix's Q3 revenue will come in at $8.54 billion, an 8% year-over-year increase, and in line with management’s forecast. Earnings per share (EPS) could grow by 12% year-over-year to $3.47.
For the full year 2023, revenue could increase by 7% to $34 billion. Analysts’ estimate for FY EPS is $11.94, up 20% from EPS of $9.95 in 2022.
www.barchart.com
Decelerating growth has made some analysts slightly less optimistic about Netflix’s stock. Last week, analysts at Morgan Stanley, TD Cowen, and Wells Fargo all reduced their respective price targets for Netflix, while Wolfe Research downgraded NFLX from Outperform to Peer Perform. The analyst stated, “The company's 2024 average revenue per user expectations look full while today's paid-sharing net additions will lead to tomorrow's gross adds shortfall.”
Wolfe has no price target for the stock, but believes Netflix's “valuation is reasonable but will not withstand falling growth.” Currently, Netflix trades at 30 times forward earnings.
At present, out of the 37 analysts following Netflix stock, 20 have a “strong buy” recommendation, 15 say it's a “hold,” and two propose a “ strong sell.”
Based on analysts' average price target of $444.39, Wall Street expects potential upside of about 23% in the next 12 months. The highest target price stands at $600 and the lowest at $215 for Netflix.
www.barchart.com
The Takeaway
According to reports, Netflix plans to raise the price for ad-free streaming after the WGA strike ends, but the company has made no official announcement so far. It will be interesting to see if the decision, if executed, increases revenue as the company competes with other streaming platforms such as Alphabet’s YouTube, Disney (DIS), Amazon's Prime Video, and others.
With the strike over and backlash over paid sharing waning, Evercore ISI analyst Mark Mahaney believes that price hikes and improved content could be positive catalysts for the company in 2024. He is optimistic Netflix will be able to meet its 2024 EPS target of $15 per share. The analyst gave the stock a Buy rating. For 2024, the consensus estimate for revenue is $38 billion, representing growth of 13% with EPS of $15.1 per share.
We will know more about Netflix’s performance and growth strategies for 2024 when it releases its earnings this Wednesday, Oct. 18.
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Analyst Pessimism Continues for Netflix (NFLX) Stock
By: Schaeffer's Investment Research | October 13, 2023
• Wolfe Research downgraded NFLX to "peer perform" from "outperform"
• Netflix will report earnings this Wednesday, Oct. 18
The shares of Netflix Inc (NASDAQ:NFLX) are moving lower today, as analysts grow more pessimistic toward the streaming giant. Wolfe Research downgraded NFLX to "peer perform" from "outperform," citing concerns after the company's growth forecast, while MoffettNathanson cut its price target to $325 from $380, noting that the crackdown on password sharing appears to have a negative impact. These bear notes come after no fewer than four analyst price-target cuts just this week.
At last glance, Netflix stock was down 1.4% at $356.22, and on track for its fourth-straight day of losses. Now trading at its lowest levels since May, the stock is still up 21.1% since the start of the year.
Analysts are fairly split on NFLX, with 25 of the 44 in coverage carrying a "buy" or better rating on the stock, and 19 a "hold" or worse. Meanwhile, the 12-month consensus price target of $458.63 sits at a 29.2% premium to current levels.
The stock will likely see some volatility next week as well, as it's no stranger to large post-earnings swings. Netflix will report earnings after the close on Wednesday, Oct. 18, with options traders pricing in a next-day move of 10.1% -- slightly lower than the 12.4% move the stock has averaged over the past two years. Following its last eight earnings reports, NFLX has finished higher only three times.
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Netflix downgraded ahead of earnings on 'full' 24 expectations: 4 big analyst cuts
By: Investing | October 13, 2023
Netflix stock falls after Wolfe Research downgrade
Netflix (NASDAQ:NFLX) shares fell more than 2% pre-market today after Wolfe Research downgraded the company to Peerperform from Outperform, as reported in real-time on InvestingPro.
“2024 ARPU expectations look full, while today's paid-sharing net adds lead to tomorrow's gross add shortfalls,” the analysts commented.
While Netflix has been expanding its share of the global premium video revenue, the analysts flag 2024-2025 growth forecasts as too optimistic.
“If future growth falls short, we doubt that NFLX's 50% P/E and 70% EV/EBITDA premium to the S&P would hold up,” added Wolfe.
The company is set to report its Q3/23 earnings on Oct 18.
Fortinet shares fall after Barclays downgrade
Fortinet (NASDAQ:FTNT) shares fell more than 3% pre-market today after Barclays downgraded the company to Equalweight from Overweight and cut its price target to $63.00 from $71.00.
This decision follows the analysts’ checks that sound incrementally negative for Q3, decreased emphasis on firewall refresh as a spending priority in their CIO survey, and potential valuation declines due to the cyclical slowdown in firewall and timeline to catch up to leading vendors in the SASE market.
“Longer term, we like FTNT's platform approach and think the stock has terminal value, but we see a balanced risk/reward which underpins our Equal Weight rating,” added the analysts.
Two more downgrades
Oppenheimer downgraded Tractor Supply Company (NASDAQ:TSCO) to Perform from Outperform and cut its price target to $210.00 from $280.00.
While Tractor Supply offers promising long-term new unit growth and margin expansion within mid-cap specialty retail, the analysts noted nearer-term concerns. “We are increasingly concerned that TSCO shares do not yet discount adequately for a potentially pro-longed, post-pandemic sales expansion lull, likely to occur as COVID-related tailwinds gradually abate,” commented Oppenheimer.
JD (NASDAQ:JD).com received downgrades from two Wall Street firms today. Morgan Stanley cut its rating from Overweight to Equalweight with a price target of $33.00 (from $55.00). Meanwhile, Macquarie downgraded the company from Outperform to Neutral with a price target of $32.00 (from $52.00).
"Shares of JD have come off sharply from peak, and YTD underperformance indicates market concerns over its lackluster growth outlook,” commented Macquarie.
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BREAKING: Netflix to open 2 physical stores in the U.S. in 2025. Fans will be able to play, shop, and eat.
By: NextGen News | October 12, 2023
BREAKING: Netflix to open 2 physical stores in the U.S. in 2025.
— NextGen News (@Next_GenNews) October 12, 2023
Fans will be able to play, shop, and eat.
- Bloomberg
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Netflix remains a compelling buy once sell-side estimates are reset - Citi
By: Investing | October 12, 2023
Ahead of Netflix's (NASDAQ:NFLX) earnings release after the close on Wednesday, October 18, analysts at JPMorgan and Citi released notes previewing the report.
Analysts at JPMorgan told investors in a note that the focus will be on the paid sharing progress, ad scale average revenue per membership (ARM) into Q4 and 2024, and operating margin trajectory.
"We remain positive on NFLX overall, but we recognize there is a growing list of questions into 3Q earnings w/the Street looking for more clarity around recent conference comments, ad business leadership changes, and whether a softer margin trajectory is coming from a position of competitive strength or slower growth (or both)," the analysts said, who maintained a Buy rating and $455 price target on the stock.
The firm estimates NFLX will have cumulative borrower monetization of 18 million by the end of 2023, 30 million by the end of 2024, and 37 million by the end of 2025. In addition, they estimate 10 million ad tier subscribers at the end of 2023, "which would mean 20M+ MAUs/viewers, which could prove optimistic."
Analysts at Citi, who maintained a Buy rating and $500 price target on the stock, said the set-up has three facets.
"First, the good news: Netflix continues to take share of video viewing and the ad tier still has significant upside potential. Second, the neutral news: We expect Netflix to report results in line with the Street on all key metrics. Third, the bad news: consensus estimates for 4Q23 and 2024 may need to come down for revenues and margins," the analysts explained.
"To us, this suggests bearish tactical positioning may be reasonable. But, once sell-side estimates get reset, we believe Netflix remains a compelling Buy as rivals increase pricing and moderate content spending opening up a window for Netflix to distance itself from rivals," they added.
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Netflix Stock Still Looks Like Good Value for Value Investors
By: Barchart | October 6, 2023
Netflix (NFLX) stock is well off its highs and is good value now. NFLX is trading for $374.31 in morning trading on Friday, Oct. 6, which is well below its Sept. 11 high of $445.36 and the year-to-date high of $477.59 on July 19.
However, given Netflix's huge free cash flow (FCF), investors expect good results for Q3, expected to come out on Oct. 18. As a result, this is good for income plays like selling short out-of-the-money (OTM) put and calls options in near-term expiration periods.
FCF Could Power Netflix Stock Higher
I discussed Netflix's huge FCF in my Sept. 15 Barchart article, “Netflix Stock is Well Off Its Highs - Ideal for Value Buyers and Short Put Traders.” For example, Netflix made over $3.46 billion in FCF in the first of 2023.
This was disclosed on the first page of the company's Q2 shareholder letter. It showed that it made $2.117 billion in Q1 and $1.339 billion in Q2.
Last year, in Q3 Netflix made just $472 million in FCF. So any Q3 number that is $1.0 billion or higher will show that the company is making significant progress with its new pricing plan.
It will also show how well it weathered the actors' and writers' strikes in Q3.
But even more importantly, analysts will be looking at the company's FCF margins. Last quarter it was over 21% for the first six months of the year.
Here is why that is important. It could propel the stock higher if the margin stays at this level or rises.
For example, analysts project Netflix's revenue next year will rise over 13% to $38.23 billion, according to Seeking Alpha's survey of 40 analysts. If we apply the 21% margin to this forecast, the expected FCF could hit $8.0 billion for the year.
As a result, using a 4.0% FCF yield, Netflix's market cap could rise to $200 billion. This is seen by dividing $8 billion by 4%. It's also the same as multiplying NFLX by 25x, since that is the inverse of 4% (i.e., 1/0.04=25x).
The point is that since Netflix's market cap today is just $166 billion, the stock could rise by over 20% (i.e., $200b/$166b-1 = 0.205). This implies that NFLX stock is worth over $451 per share (i.e., 1.205 x $374.31 = $451.31).
Shorting OTM NFLX Put And Calls Options For Income
Last month we discussed selling short the $380 strike price puts for expiration on Sept. 30. The stock closed at $377.60 on Sept. 30, so these expired in-the-money (ITM). However, the investor was able to collect $3.33, so their breakeven price was $376.67.
In other words, by selling these OTM puts the investor was able to collect income and still had a profit, even though the short was exercised and the investor now had to purchase the stock at $380.
One thing that the investor can now do is sell out-of-the-money (OTM) calls against these shares. For example, the Oct. 27 call options at the $405 strike price trade for $8.28 today.
That means the investor can make a 2.19% covered call yield with just 3 weeks to expiration. That is seen by dividing the $8.28 premium received by today's price of $377 per share. Moreover, that strike price is over 7.85% over today's price. That means that if the stock rises to that price and the investor has to sell his shares at $405, they keep the extra 7.85% realized gain. The total potential return is therefore 10% (i.e., 2.19% +7.85% = 9.95%).
NFLX Calls - Expiring Oct. 27 - Barchart - As of Oct. 6
In fact, the $400 calls trade for $9.70. This provides a 3-week 2.57% covered call yield, as well as a potential 6.52% realized gain or a potential 9.09% return.
Moreover, another way to play this, without having to sell any shares if called, is to sell OTM puts. For example, the Oct. 27 puts at the $350 strike price trade for $9.35 per put. This strike price is 6.79% below today's spot price, equivalent to the OTM widths of the calls above, but the premium is higher.
Moreover, the yield is significantly higher. Here is why. The investor only has to risk $350 per contract. So the yield is $9.35 divided by $350.00, for a total yield of 2.67%. Moreover, the investor has no obligation to have to sell any stock, even if the stock falls.
Here is what that means exactly. The covered investor has to buy the shares at today's price but their return is lower since their investment cost is higher. This is because the spot price of $377 requires an investor to spend $37,700 or 100 shares in order to sell 100 covered calls.
However, the short put investor only has to secure $35,000 in order to sell short 100 puts. Therefore, with a similar premium level, the actual return is higher for the put investor since their investment cost is lower.
The bottom line is that Netflix stock is likely to move higher and it makes sense to short either covered calls or cash-secured puts for the value investor.
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