Netflix has grown despite a catastrophic period 1½ years ago when their announcement of an unpopular change in subscription plans and price hikes drove away customers.  This move, however, appears to have a high potential payoff in the long term.  Netflix has managed to move away from the antiquated DVD rental market into a stream-focused model with unparalleled growth potential, and has, for this and myriad other reasons, begun to spend greater sums on content creation and has come back into favor among consumers.  Recent surveys have shown 40 percent of consumers either have the service or want a subscription, signaling an impressive recovery in brand equity.

The general bullish sentiment is dominant in both the short- and especially the long-terms.  Fundamentals like expanding internet penetration into new markets, both in the US and abroad, as well as a continuing paradigm shift in the nature of media consumption.  A recent article in Forbes states that, while the market for online media is expanding, there is even more impressive growth in the rate of consumption of streaming video.  There remain short term concerns about the volatility of the stock, but these jitters can and likely will be lifted by a continuing period in sustained growth (with many pointing to the stock hitting 200 in the near-term) and increasingly clear fundamental evidence for growth potential.

Playing the NFLX lack of movement until Earnings on April 22nd 2013

The Trade: Buying the April 26th 185 Straddle and Selling the April 19th Straddle for $17.30 debit
Risk: $1730 per 1 lot
Reward: Unlimited (if front month Calls expire worthless, still long backmonth Calls)

Delta of this Trade:
Delta: Flat
Gamma: Short
Vega: Long
Theta: Long

—
Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com

Sometimes, I miss trades, because I am at a meeting, on the phone or
away from my desk.  Every morning when I wake up the first thing I do
is turn on CNBC.  I watch to see the stocks that are moving in
pre-market trading. On 4.1.2013 I saw a Trader buy 1384 URBN April 39
Calls for $.75.  I announced this trade real-money in the BEST LIVE
Trading Room.  This was the biggest order over the last 10 trading
days.  Let me show a breakdown of how much money this trader made.

Paper bought 1380 URBN April 39 Call Spreads for $0.75 (Paper is an order from a hedge fund, mutual fund, retail bank, or BIG trader)

Risk: $75 per a lot
Reward: if implied volatility unchanged, these Calls will be worth $1.60 rough;
Breakeven: $39.75
Cash Outlay for this Trade: $103,800

Greeks of this Trade:
Delta: Long
Gamma: Long
Vega: Long
Theta: Short

On 4.2.2013, these Call Spread will be worth around $1.60, so lets
breakdown this trade’s profits:

$1.60- $.75 * 100 * 1384=  $117,600

If a trader risked $1,000 on this trade and bought 12 options they
would have netted $1,020.

If a trader risked $5,000 on the trade and bought 60 options, they
would netted $5,100.

This is just another example of trading with the BIG money and Hedge
funds in the BEST Live Trading Room http://bit.ly/108XTgh as I
breakdown over 2,000 trades in a day and also tweet them on our
Premium Twitter feed http://bit.ly/WmtfI4

By the way, SEC leave those HNZ traders alone.

—

Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com

Trade:  Buying the May 72.5 Calls for $.57
Risk: $57 per 1 lot
Reward: Unlimited
Breakeven: $73.07

Greeks of the Trade:
Delta: Long
Gamma: Long
Vega: Long
Theta: Short

—
Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com

Paper bought 1000 CYBX May 40 Puts for $1.00 (3.0 times usual volume) when stock was trading $46.83|
Paper bought 1200 SCCO June 36 Puts for $1.40 (3.2 times usual volume) when stock was trading $37.11
Paper bought 1500 NWSA May 31 Puts for $1.55 when stock was trading $30.20
Paper bought 2000 LXK April 26 Puts for $.74 (3.4 times usual volume) when stock was trading $26.36
Paper bought 2298 LIWA Nov 5 Puts for $.66 (19.0 times usual volume) when stock was trading $5.11

Paper bought 1000 SOXL April 36 Calls for $2.40 (3.7 times usual volume) when stock was trading $37.35
Paper bought 1200 TIBX April 22 Calls for $.20 when stock was trading $20.25
Paper bought 1265 THC April 47 Calls for $1.95 (2.2 times usual volume) when stock was $48.26
Paper bought 14,925 OKE Oct 52.5 Calls for $1 (10.5 times usual volume) when stock was trading $47.96
Paper bought 400 CPNO May 40 Calls for $1.00 (7.8 times usual volume) when stock was trading $40.49

Paper bought 14,925 OKE Oct 52.5 Calls for $1 (10.5 times usual volume) when stock was trading $47.96
Paper bought 20,000 HD May 70 Calls and Sold May 67.5 Puts (3.6 times usual volume) when stock was $.84 debit when  stock was trading $69.94
Paper bought 9753 WLT May 25 Puts for $1.57 (2.9 times usual volume) when stock was trading $26.32
Paper bought 3961 GM 4.5.2013 Weekly 28 Calls for $.29 when stock was trading $27.86
Paper bought 1646 PAL Jan 2014 3 Calls for $.20 (13.6 times usual volume) when stock was trading $1.67

GM competitive strive

• Plans to compete heavily against its key competitor FORD with its new V8 Economy trucks.
• Actively talking about re-building its un-active manufacturing plants.
• GM is in the midst of producing electric vehicles, and testing them in South Korea.
• GM actively investing in an IT/RD department.

GM has done a remarkable job at re-establishing itself, paying down its debt. In the short term $GM may be discounted due to the DOW, and S&P being overvalued in the long term forty dollars a share is a very realistic target .GM releases earnings on April 29, 2013 analyst are expecting $0.40 any number above $0.40 would be better than Q3 2012 and a good indication that company is recovering at a greater rate.

(Vehicle sales in the U.S)  

—
John Castillo
Independent Contributor