NFLX Bullish Calendar Call Spread with 323% Upside

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This NFLX Calendar Call Spread Can Net 323%

Bullish play with a target stock price of $710

Strategy has +323% upside potential and 30% undervalued

Strategy: NFLX Calendar Call Spread
Sell 19-Jul-24 710 Call11.55
Buy 16-Aug-24 710 Call18.45

Netflix price is now up +0.7% today to $648.97. The shares have been in a steady uptrend since May 28, based on NFLX moving averages. Setting up this calendar spread with strikes at $710 gives you a bullish bias to tap into NFLX stock's strength.

Option Profit Calculator Results for NFLX Calendar Spread at 19-Jul-24 Expiration

In this scenario, the optimal stock price for the option strategy would be $710.00 on the date of the first expiration, July 19, 2024. This is equal to the strike price of the options in the spread. Since NFLX is in a technical uptrend currently, and the strikes are above the current stock price of $648.73, the spread is taking advantage of the stock's upward momentum. If the stock price is $710.00 at expiration, we can benefit from the 19-Jul-24 call, which we sold, expiring worthless, and the option that we are long, the 16-Aug-24 call, will still have time premium built in.

Since we do now know what the exact implied volatility will be on July 19, we can use our historical data to make an educated estimate to help us calculate the value of the 16-Aug-24 option. Applying the median historical implied volatility of 34.9 from similar options, the theoretical value of the call is 29.20 at the date of the 19-Jul-24 expiration. Using the above assumptions gives us a potential upside of +323% for this calendar spread.

NFLX Calendar Spread Value vs. Market Price

According to Market Chameleon estimated value, NFLX Calendar Spread is trading at a 30% discount to historical benchmark.

If we use historical data to measure how similar spreads in NFLX were priced in the market, the 4-year average price was 9.83, with a high mark of 14.06 and a low of 4.66.

Currently, the calendar call spread is bid at 6.25 and offered at 6.90. The midpoint of the spread is 6.58.

If we use 9.83 as our historical fair value benchmark, the current market ask price is at a 30% discount, while the current market midpoint represents a 33% discount.

Current PriceHistorical Values of Similar Spreads
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.


The NFLX calendar call spread we've identified here can be a good way to play a bullish outlook because the option strategy has a +323% upside potential, is 30% underpriced relative to historical measures, and will benefit if the stock continues to trend higher to $710.

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