Netflix, Inc. (NFLX), Trending Stock Report

There are two things topping news headlines and social media this morning. The first is related to a massive IT outage and the second is Netflix, Inc. (NFLX) earnings. We’ve had a lot of success recently with high-probability trades and NFLX looks to be the more predictable target for another high-probability trade this morning.

NFLX shares price action post-earnings are inconsistent. They jumped 10% after January’s release; they fell 9% after April’s release. This morning, however, the shares are barely moving. One thing that is not inconsistent is what happens to volatility expectations. They tend to get cut in half the day after earnings are reported. With this in mind, we may be able to take advantage of the expected volatility crush in another zero-days-to-expiration (0DTE) high-probability trade today.

This Volatility Term Structure for NFLX shows us the implied volatility of the at-the-money options for today’s expiration has the highest volatility expectations. To learn more about Volatility Term Structure, click here. If history holds true, we can expect IV to get cut in half today. If we can get filled at the right price early, the expected volatility crush will work in our favor.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of NFLX’s price over the past year. You can see that the actual behavior (the blue histogram) doesn’t look like the modeled expectations at all. This graph is telling us that yesterday’s closing prices for NFLX option are off the mark by a huge margin. That said, this graph does not look at moves after past earnings reports. It is looking at every one-day move NFLX has made in the last year.

NFLX is trending in the news and social media after announcing earnings yesterday. Volatility expectations were extremely high at the close because NFLX has a history of making big moves around earnings announcements. We may be able to enter a 0DTE high-probability trade at a high price early this morning to take advantage of the expected volatility crush if NFLX continues to behave the way it has in the past.

To get the details on today’s trade, be sure to read today’s ODDS Online Daily Option Trade Idea.