It is time for one of the more volatile stocks (also a favorite in retail trading) to report earnings for the last quarter ending on Jan 31, 2014. So will you be glued to Netflix or glued to the market in preparation for the earnings?
If NFLX closes today at $350.25:
On average expect it to close between $286.90 and $413.60 by the end of the week. If it goes according to the average, expect a $63.40 move in either direction by the end of the week. Out of the past 14 times it has gone down in price 7 times. If the largest change (up or down) over the past 14 earnings reports is repeated, expect a move more to the tune of $173.70 in either direction. The S&P 500 has followed Netflix’s direction up or down for the week of earnings only 5 times out of the past 14.
As you can see Netflix has the potential for large moves around earnings. The options will be priced accordingly. Therefore it wise to limit risk.
Good luck and trade rationally.
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