Trade Alert: Your First Recommendation

To kick off our busy earnings week, I have your first Earnings Drift Alert trade for you today.

After yesterday’s closing bell, Netflix (Nasdaq: NFLX) — an online company that allows you to stream some of your favorite shows — topped earnings estimates and opened nearly 20% higher today. This triggered our first trade as both of those items surpassed our parameters.

Based on studying a decade’s worth of earnings reports, we know that Netflix typically rises the following three weeks after posting an earnings report like this. In fact, as I mentioned last week, the company has basically represented a potential trading opportunity in two out of every three earnings reports.

So, to take advantage of that uptrend, we’re grabbing the November call options today.

Here’s your action to take:

Action to Take
Buy Action to Take
Stock: Netflix Inc. (NFLX)
Option Type: Call Option
Expiration: Nov-18-2016
Strike Price: $120
Option Symbol: NFLX161118C00120000
Action: Buy to Open
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $4.60
Trade Deadline: If your order is not filled by my next update, I will update you on the trade.
Note: Do not place a market order. Set the limit order at $4.60.
Once this order is filled, place the following order:
Sell Action to Take
Stock: Netflix Inc. (NFLX)
Option Type: Call Option
Expiration: Nov-18-2016
Strike Price: $120
Option Symbol: NFLX161118C00120000
Action: Sell to Close Half
Order Type: Limit Order
Duration: GTC (Good ‘Til Canceled)
Limit Price: $6.90
Trade Deadline: Keep this order open until it is filled or canceled.
Note: This second order will allow us to collect a 50% gain on half of our position in the event that a quick move happens before I can get a trade alert out to you.

That’s it for your first alert. Short and sweet. But if you have any questions, remember you can always reach me at earningsdrift@sovereignsociety.com. I’ll continue to keep you updated on the position as we move closer to our exit date, which is in about three weeks.

And remember, to ensure we’re creating a great product for you, I need your feedback. So tomorrow I will send you a quick survey asking you how the trading process went.

Until next time, good trading…

Jeff Opdyke
Editor, Earnings Drift Alert