Profitable: I make money on this trade if NFLX closes between $76.74-$93.26 by April 27, 2012.

Break-even:  I breakeven on this trade if NFLX closes at $76.74 or $93.26 by April 27, 2012.

Unprofitable: I lose money on this trade if NFLX closes under $76.74 or above $93.26 by April 27, 2012.  The most I can lose on this trade is the Price of the Spread, $1.74.

UPDATE 4.24.2012  With time on my side and more potential profit to be made, I am leaving this trade on.  It is currently worth about $5.50, good for a triple.

UPDATE 4.27.2012  I will close this position out and it has worked very well.  This spread should be worth about $9 today.  

UPDATE 4.30.2012  I took every single penny out of this trade and when the stock was trading $84.50 on Friday, I took this trade off at $9.50.  This was a HUGE winning trade and another winner at KOTM. 

Read more about calls by www.keeneonthemarket.com

Equity markets are pretty flat after a morning sell-off. All the major indices, S&P 500, NASDAQ, and DJIA, are down at least 1%. Overseas, these losses were magnified, with the FTSE closing down 1.8%, the DAX down 3.4%, and the CAC 40 lower by 2.8%. 

Treasury futures are higher, but not significantly so. 30-year bond futures gained 0.6%, and 10-year note futures rose 0.25%. The US$ index is also up 0.4% – lifted mostly by a sharp drop in EUR/USD to 1.3130 from above figure-1.32 on Friday.

With calm back in markets, I would not be surprised to see some losses pared in the afternoon. 

Today’s earnings will see the following companies report. Traders are selling the stocks into earnings – whether that is taking off positions or just in conjunction with the broader equity market decline is yours to decide:
– Ameriprise Financial (AMP): -1.5% today

– Netflix (NFLX): -3.2% today

– Rent-A-Center (RCII): -1.4% today

– Texas Instruments (TXN): -1.5% today

– Lions Gate Entertainment (LGF) upgraded to Above Average from Average: Caris & Company

– Rambus (RMBS) downgraded to Hold from Buy: BWS Financial

– First Solar (FSLR) downgraded to Sell from Hold: Maxim Group

– MB Financial (MBFI) downgraded to Hold from Buy: Stifel Nicolaus

Investors are also keeping an eye on France to see how elections over the weekend will play out. Socialist Francois Hollande won 28.6% of the vote in the first round of the presdiential election, compared with 27.1% for President Sarkozy. Hollande favors a tax on financial transactions and renegotiating Europe’s fiscal accord. Markets are down sharply in Europe, with the FTSE 100 lower by 1.8%, the DAX down 2.9%, and the CAC 40 off by 2.2%.

Also, this morning, Pfizer (PFE) is reportedly selling its baby food business to Nestle SA for more than $10 billion. Shares of PFE are down 0.75% in early trade. This morning, ConocoPhillips (COP) and Xerox (XRX) report earnings.

Treasury yields are falling this morning in conjunction with a drop in equities. Prices on the 30-year bond and 10-year note are up 0.6% and 0.3%, respectively. The US$ is also stronger, gaining nearly 80 pips against the EUR (1.3130) and 40 pips against GBP (1.6080). USD/JPY has sunk to near session lows, trading at 81.10 ahead of the U.S. open. Gold is trading 0.7% lower, and Crude Oil futures are down 0.9%.

No economic data will be released this morning in the U.S. On Friday, the first estimate of Q1 GDP will be released. 

– This week shows that traders are looking for good companies. Companies that missed expectations are getting sold, hard. Sandisk (SNDK) lost 11%, Riverbed (RVBD) fell 29%, and Tempur-Pedic (TPX) shed 20% – just today

– The on-again, off-again relationship with Europe continues. Traders were concerned about Spain’s debt early in the week, sending Spanish 10-year notes to above 6%. One OK auction later, and Spanish 10-year bonds are back below that critical figure and the world is right again

– EUR/USD is set up for a move higher. Finally, the currency pair was able to close above its daily Ichimoku Cloud (1.3190). We would be a buyer at the open Sunday, and expect that prices could move towards the 1.35 level in the near term. Of course, that all depends on the G-20, IMF, and World Bank not screwing things up this weekend. Initial reports of a $430 billion fund boost is a good start

– Elections in France this weekend… with French President Sarkozy expected to lose to the Socialist candidate

Have a good weekend everyone. 

Andrew talks Earnings: Riverbed, GE, MIcrosoft, McDonalds, Apple, Netflix & trading strategies. Andrew Keene fills in.

  Andrew talks about Qualcomm, Apple, F5 Networks, Chipotle, Microsoft, Wynn & earnings.

– SNDK -13.4%
– TPX -20.8%
– RVBD -26%

Equity markets themselves are performing well. DJIA front-month futures reclaimed the 13,000 handle, trading nearly 1% higher on the day. S&P futures gained 0.7%, while the NASDAQ futures are up 0.5%. Along with equities, Crude Oil is higher by 1.5%, trading just under $104 per barrel. 

The US$ is also taking a hit today. Yesterday, we wrote that we are waiting for EUR/USD to break out of its Ichimoku Cloud for an indication on where prices may move in the future. That cloud contains prices between 1.3055 and 1.3190 on a daily chart. EUR/USD is trading at 1.3214, so a close at or above the 1.3190 would be a buy signal, possibly for an extension to the 1.35 level.

In Treasury markets, the 30-year bond is down 0.3%, while the 10-year note has fallen 0.1%. 

At this point, on the week, Orange Juice futures are among the largest gaining commodities, rising 3.9%, double the gains of Copper (1.9%) and the DJIA futures (1.8%). On the negative side, Sugar futures are down 7.9% and Natural Gas fell another 2.7%. Year-to-date, Natural Gas is now down 35.4%. Ouch.

– Capital One (COF) price target to $70 from $60: FBR Capital

– LinkedIn (LNKD) intiated as Market Perform: Northland Securities

 General Electric (GE) EPS beat street expectations by a penny, showing EPS of $0.34. Revenue was also strong, up 4% when you back out revenue earned by the NBC-unit, now owned by Comcast. GE prices are indicated up 1% in premarket trade. Schlumberger (SLB) reported EPS in line with consensus, at $0.98, but strong revenue has helped SLB to gain 3% this morning. We are still waiting this morning on McDonald’s (MCD) quarterly report.

The strong day of reports seemingly kicked off last night with Microsoft (MSFT) beating by 2 cents at $0.60. MSFT is indicated to open 3.6% higher when markets open in an hour. Chipolte (CMG) also beat expectations, but CMG has only gained 0.5% ahead of the open. 

Today, officials from the G-20, IMF, and World Bank begin meetings in Washington, D.C. We do not expect any fireworks there until an official communique is released over the weekend – but will keep an ear to the ground.

We are in the midst of an incredibly strong earnings quarter with major companies beating the street’s expectations on a daily basis. Yet, the market has not rallied yet. We think that with all the data out, the market could be biding its time before another run higher. We are eyeing the S&P futures to move back past 1,420 in the coming weeks.