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Originally Posted by ibavly
From the 2017 thread, this was an interesting one. Nothing unreasonable, but you have to be very careful when you think the market is offering you something amazing.
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Do January 19 puts cover next earnings? If so they're an incredible bargain. Netflix is of course priced schizophrenically, like all high betas tend to be at the end of long bulls. See 2000 - the crappier the stock, the worse the business, the more it ran up.
If they capture two earnings, $175 Jan 19 2018 puts for $5 are the mother of all bargains, at least 200% of +EV imo. A minor market correction will put it below $170 in days.
No opinion whatsoever on earnings.
They were a bet on the coming earnings and didn't capture two earnings. They were however a huge bargain if they did. They were still a strong bargain if they didn't.
They were very good value at the time, hugely +EV. Netflix at $200 (when I recommended the $175 puts):
- Beat expectations by a huge amount
- Fell from $200 despite the above and despite this period being a raging bull market
- Ended up in the low $180s (-8%) despite both of the above.
Basically, everything went wrong that could go wrong and you could have gotten out at a nice profit. If you don't recognize that's a hugely +EV bet, you shouldn't be trading.
This is like the opposite of an example of a bad call. An example of bad call would be me thinking the economy didn't have the steam some months ago to keep ripping higher. Should have had more faith in Trump's extensive deregulation and tax cutting efforts.
Hell, I've even made bad calls on NFLX. It's amusing as hell you pick the one that's an excellent call.
Last edited by ToothSayer; 01-22-2018 at 05:36 PM.