Widowmaker Earnings

NFLX to report earnings Monday

Netflix Inc. is scheduled to report its first-quarter earnings results after the market closes on Monday.

Here's what investors can expect:

Earnings: Netflix is expected to report earnings of 37 cents per share, according to analysts surveyed by FactSet. That would be a more than sixfold increase compared with the 6 cents per share earnings Netflix reported during the same quarter a year ago and a 147% jump from its most recent fourth quarter. Netflix has beaten the FactSet consensus on earnings in eight of the last 10 quarters.

Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects Netflix to report per-share earnings of 37 cents as well.

Image source: Marketwatch

Revenue: Revenue for the quarter is expected to hit $2.64 billion, according to analysts tracked by FactSet. That would be up 35% from the previous year's $1.96 billion during the same quarter. Netflix's forecasted first-quarter revenue breaks down to $1.48 billion in domestic streaming revenue, $1.05 billion from overseas streaming and $121 million in domestic DVD shipping subscriptions. Netflix has either met or beat FactSet's consensus on revenue in five of the last 10 quarters.

Share price: Analysts covering the stock have an average 12-month price target of $149.00, which is more than 4% above Thursday's close. The analysts, on average, rate Netflix stock at overweight, according to FactSet.

Shares of Netflix are up more than 16% in the year to date and nearly 35% over the last 12 months. Comparatively, the S&P 500 index is up nearly 5% in the year to date and the Dow Jones Industrial Average is up almost 5%, while the Nasdaq Composite is up more than 8% in the year.

Image source: Marketwatch

Other issues: Netflix's biggest story is its continued quest to add subscribers. The stock has been known to swing one way or the other based on positive or negative subscriber numbers, and expectations for the first quarter are low, compared with previous quarters. Analysts tracked by FactSet forecast the streaming company will add 5.3 million subscribers, compared with 7.1 million during the most recent fourth quarter and 6.7 million during the 2016 first quarter.

A relatively weaker content slate is the reason for the decline in subscriber additions, according to MKM Partners analyst Rob Sanderson. In the same quarter a year ago Netflix released the fourth season of "House of Cards," the second season of "Daredevil" and "Fuller House."

While Netflix released "A Series of Unfortunate Events" and two stand-up comedy specials from Dave Chapelle, Sanderson wrote that expectations are higher for content coming out in the second quarter, with seasons five of "House of Cards" and "Orange is the New Black" coming back, the debut of Brad Pitt's "War Machine" film and with first-quarter release "13 Reasons Why" gaining buzz.

All of Netflix's content, however, comes at a cost, and one that is continually increasing as competition for quality series and film intensifies in Hollywood. Netflix is expected to spend $7 billion on content in 2017, up from $6 billion last year.

"We continue to believe that Netflix cash burn is important and is largely overlooked by investors," wrote Wedbush analyst Michael Pachter. "As the cost of content continues to be bid up, we expect Netflix to continue to burn cash to fund its acquisition of original and exclusive content."

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Options Insider Radio Network 

Episodes you may have missed from Options Insider Radio last week

Option Block 611: More All-Stars than You Can Handle

Trading Block: Today we have very special guest co-hosts: Nick Howard, QuickStirke. Ophir Gottlieb, CMLVIZ.com VIX blowing out the down side MOAB bomb drops Commodity update Uncle Mike's silver collar Odd Block: Puts trade in iShares Barclays 7-10...

Posted April 14th, 2017

Trading Block: Today we have very special guest co-hosts: Nick Howard, QuickStirke. Ophir Gottlieb, CMLVIZ.com

• VIX blowing out the down side
• MOAB bomb drops
• Commodity update
• Uncle Mike's silver collar

Odd Block: Puts trade in iShares Barclays 7-10 year bond ETF (IEF), puts trade in Hanesbrands Inc (HBI), calls trade in Whiting Petroleum Corp (WLL).

Strategy Block: Uncle Mike Tosaw discusses trading over a long weekend.

Mail Block/Options #QuestionOfTheWeek

With $TSLA threatening $315 how are you leaning in your #Options trades this month? Would you rather:

• Buy 1-month $300 put
• Buy 1-month $330 call
• Sell 1-month $300 put
• Staying far away from it

Listener Question:

Question from AndersonInvesting - New to options. I use TD Ameritrade but currently I do not like it for options. I was looking at Charles Schwab. Any recommendations for an options newbie? Also looking at AMD puts to protect gains (averaged in at 13.23. Earnings date has been announced for May 1st.) Any suggestions there?

Around the Block/This Week in the Market:

• April 14: Consumer Price Index, Retail Sales, Consumer Sentiment

Options Playbook Radio 154: UAL Butterfly with Calls

For the last few episodes, we explored backspreads in SNAP. This week we shift gears to another name that is higly volatile right now, United Air Lines. Let's explore a long butterfly spread with UAL calls. In this episode: A review of the SNAP...

Posted April 13th, 2017

For the last few episodes, we explored backspreads in SNAP. This week we shift gears to another name that is higly volatile right now, United Air Lines. Let's explore a long butterfly spread with UAL calls.

In this episode:

• A review of the SNAP backspreads
• Volatility in UAL skyrockted
• Why choose a butterfly spread?
• Choosing a one-day trade
• Selecting strikes
• Setting up the trade
• What is the cost?
• What do we want to happen?

The Advisors Option 54: Live from the Swan CIO Summit

Posted April 13th, 2017

Recorded live at the Swan CIO summit, Mark is joined by:

• Chris Hausman, Portfolio & Chief Technical Strategist, Swan Global Investments
• Aash Vyas, Director of Portfolio Strategy and Overlays, Swan Global Investments

They discuss:

• What is the CIO Summit?
• What were the highlights of the Summit?
• Upside/Downside Capture
• The importance of education
• Are options becoming more mainstream?
• Harvesting risk premium
• Why Swan takes a longer-term view for choosing expirations
• Looking into crystal ball for realized volatility levels
• New participants in the overlay space
• Shifting the paradigm from harvesting premium to premium extraction
• Navigating the spike in skew
• The efficacy of skew

Office Hours: Listener questions and comments

• Lumping options funds into the 'alts ghetto.' Is there a better category?
• Are there too many options exchanges?

Option Block 610: TSLA, VIX and More

Posted April 11th, 2017

Trading Block: Tesla is now more valuable than GM.

Odd Block: Calls trade in MOMO Inc. (MOMO), calls trade in SunPower Corp. SPWR and calls trade in First Solar, Inc. FSLR.

Mail Block/Options QuestionOfTheWeek

With $TSLA threatening $315 how are you leaning in your #Options trades this month? Would you rather:

• Buy 1-month $300 put
• Buy 1-month $300 call
• Sell 1-month $300 put
• Staying far away from it

Around the Block: What is lighting up our trading screens for the coming week?

Volatility Views 250: Busting VIX Myths

Posted April 10th, 2017

Volatility Review: Today we are joined by guest co-host Bill Valentine, Commodore Fund

• VIX Cash - 12.39, VVIX - 84
• CBOE Skew Index - 131, back down to normal levels
• VIX Options: Mon - 597k, Tues - 368k, Weds - 720k, Thurs - 564k, ADV - 659k, (Total: 9.8M - 7M Calls, 2.8M Puts)
• VIX Call/Put - 2.4/ 1
• OIV/OVX - 26 - in the toilet
• GVZ - 12.85
• TYVIX - 5.12

Volatility Voicemail: Comment from LVT. Re: your discussion from last week. I think moving averages are worthwhile when analyzing VIX. Other than that, not so much.

Crystal Ball: Your VIX prognostication headquarters

Last week:

• Mark L. - 12.50
• Andrew - 12
• Russell - 12.80

This week:

• Mark L. - 12.65
• Mark S. - 12
• Russell - 9.87
• Bill - 13

This Week in Futures Options 48: Can You Buy a Barrel of Crude?

Posted April 10th, 2017

Topics this week include:

• WTI/Crude Oil
• Gold
• Skew

Futures Options Feedback: Listener questions and comments

• Question from Andrew L. - On the note of your oil sulfur question here is another weird one that's been bugging me. If I buy a contract for a barrel of oil and take delivery do I actually get the barrel?
• Question from SillyPuddy - I am a newly minted FO approved trader but yet to make my first trade. What product and strategy is your go to for noobs.
• Question from NoizeFun - Can we get a silver recap on the show this week? Plz?

Where to Find Options Insider Radio?

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Options Insider Radio Network Live Recordings

Do you want to be a part of the fun?

This is when you can access the LIVE shows this week:

Monday:
Option Block LIVE at 3pm Central

Thursday:
Option Block LIVE at 3pm Central

Friday:
Volatility Views LIVE at 12pm Central
This Week in Futures Options LIVE at 1:30 Central