There have been rumors circulating that APPL would actually like to buy NFLX. I’m not sure if that’s the case or not. Either way, this stock is very bullish from a technical stand point. I would enjoy and appreciate a few more days of sideways movement.
You can think of this stock like an eight-year old child. So much energy all the time but you know at some point the child (or the stock) needs to rest. That’s what the sideways move would do. I noticed just recently a pennant pattern on NFLX. Higher lows were made along with similar highs and a decrease in volume. I’ve drawn the pattern for you. This represents a consolidation and a continuation in the trend, if it breaks bullish, which it did this week in fact.
Notice the 178 trigger. Many were informed by yours truly that if we did break bullish, 185.80 would be a great stopping location. A $7 move in one day is not bad for any investor, especially an options trader.
KEY LEVEL NOW
Now, NFLX is at a strong resistance. This resistance was created from a gap on September 15, 2011. Sellers will and are going to sell the stock there.
It would be a much higher of a probability to wait for the stock to close into that gap. $189.80 would be a great location to see NFLX close above. The trade could be entered a few minutes before market close. If that happens, a $10 move in the stock is likely, representing a gap fill. NFLX is very volatile right now, so option traders keep an eye on implied volatility when purchasing. If you own shares of NFLX, this is an incredible location to sell $190 covered calls for February.
Remember, plan your trade and trade your plan!
