27 May
on options action tonight , Tony has a trade on NFLX . here is the link for the video clip
first off, im 50/50 that technical analysis even works. seems to have as many false positives as correct ones or at best a self fulfilling prophecy.. since TA is putting human nature into a graphical picture, IMO the time frame you are referencing should make sense. ie.. going back 5 years on a chart looking for resistance i dont think makes sense.. in other words , is the expectation that a crowd of people bought 5 years ago.. held all the way higher and now after all that time will sell at 240 to get their money back? seems unlikely
my timeframe does not paint such an optimistic picture . i see 2 big gaps down from earnings and still in general downtrend. if your thesis is its-so-bad-its-good, or you just want to take a shot thats something else. Tony comes up with in my opinion and overly complicated partially in the money credit put spread, collecting about $7 ($700).. as stock moves higher that amount decreases and you take profits by buying back cheaper.
Instead, if for some reason you "wanted to take a shot" here id go with something more straight forward while allow for an additional 30 points of downside if you get the direction wrong... a call spread risk reversal.. using same July Opex:
Sell the July 160 Put to help pay for:
Buy the 195/205 call spread -- midpoint now is debit about $1.00 .
max profit is $10, the width of the call spread, max loss the $1 debit if stock is above 160 at opex. below 160 at opex and without trade management you will be "put the stock"
note that at 160, Tonys trade is at max loss
i picked the 160 level for it being below even the low on 12may
No comments:
Post a Comment