Netflix Breaks To New All-Time High, Options Traders Hammer Calls

Netflix, Inc NFLX made a new all-time high of $598.76 on Thursday before falling back down to test support at its Jan. 20 previous all-time high of $593.95. Profit takers likely came in due to the stock’s relative strength index (RSI) measuring in at about 82%.

Relative strength index is a popular momentum oscillator that measures the magnitude of price momentum. When a security’s RSI measures over 70%, it's considered to be in overbought territory, which is a sell signal for technical traders.

Virtus Investment Partners' Joe Terranova said on Wednesday he planned to play the stock’s momentum and said Netflix was setting up to break to a new all-time high. Terranova predicts the stock could reach $625 or even $650.

On Thursday options traders began hammering Netflix call contracts and together bet over $2.54 million the stock would trade higher. Netflix may need some consolidation to cool its RSI down before another run but institutions must not see the stock retracing significantly any time soon because there were no notable put contracts purchased.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The NFLX Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

At 9:31 a.m., a trader executed a call sweep near the ask of 304 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $102,448 bullish bet for which the trader paid $3.37 per option contract.
At 9:32 a.m., a trader executed a call sweep near the ask of 244 Netflix options with a strike price of $600 expiring on Sept. 10. The trade represented a $122,000 bullish bet for which the trader paid $5 per option contract.
At 9:36 a.m., a trader executed a call sweep near the ask of 440 Netflix options with a strike price of $600 expiring on Sept. 10. The trade represented a $282,040 bullish bet for which the trader paid $6.41 per option contract.
At 9:41 a.m., a trader executed a call sweep near the ask of 215 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $46,010 bullish bet for which the trader paid $2.14 per option contract.
At 9:45 a.m., a trader executed a call sweep near the ask of 1025 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $361,825 bullish bet for which the trader paid $3.53 per option contract.
At 9:50 a.m., a trader executed a call sweep near the ask of 213 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $92,016 bullish bet for which the trader paid $4.32 per option contract.
At 9:50 a.m., a trader executed a call sweep near the ask of 209 Netflix options with a strike price of $590 expiring on Sept. 3. The trade represented a $185,383 bullish bet for which the trader paid $8.87 per option contract.
At 9:53 a.m., a trader executed a call sweep near the ask of 249 Netflix options with a strike price of $600 expiring on Oct. 15. The trade represented a $487,827 bullish bet for which the trader paid $19.23 per option contract.
At 10:48 a.m., a trader executed a call sweep near the ask of 258 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $81,786 bullish bet for which the trader paid $3.17 per option contract.
At 10:53 a.m., a trader executed a call sweep near the ask of 1133 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $421,476 bullish bet for which the trader paid $3.72 per option contract.
At 11:29 a.m., a trader executed a call sweep near the ask of 343 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $136,171 bullish bet for which the trader paid $3.97 per option contract.
At 11:47 a.m., a trader executed a call sweep near the ask of 311 Netflix options with a strike price of $595 expiring on Sept. 3. The trade represented a $158,921 bullish bet for which the trader paid $5.11 per option contract.
At 12:32 p.m., a trader executed a call sweep near the ask of 272 Netflix options with a strike price of $600 expiring on Sept. 3. The trade represented a $71,536 bullish bet for which the trader paid $2.63 per option contract.