Netflix Earnings

Stock prices can be very volatile during earnings season and on 4/17 was when Netflix reported earnings for the last quarter.  There was a lot of bullishness around the stock as the price had been going up for some time, so there was some opportunity to make some profit using options.  I like Netflix(NFLX) as it’s a product I use, and I have some positions in NFLX and though I would have been comfortable with an outcome of receiving the stock at my strike price, I was more hoping that I didn’t so I could turn around and have that money free to do with Facebook(FB) or other companies I like reporting earnings.

How I Made $420

So, how did I make the $420 on put option, I sold 1 put for the April17 at $142 strike for $4.20 on April 17th.  So the option only spanned a week.  Through the week there was some downs all the way to $140, but ultimately on Friday it closed at $142.87, just out of my strike.  So, I was able to keep my 14K and $420 for more options opportunities in the coming weeks.  This is little less than a 3% return in 5 days.  Not bad.  

In Closing

I remember my aunt told me long ago that you needed to have money in order to make money and this is true particularly when I am doing these secured put or covered call type options, a lump sum of money is needed.  However, the return is quite worth it as a year ago I didn’t imagine the possibility to make cashflow from the stock market much like I could from real estate.  It is just fantastic what financial literacy does for you.