Streaming stock Netflix Inc (NASDAQ:NFLX) has cooled off from its July 30 record high of $1,341,15, last seen trading at $1,225.62. Those betting on a short-term comeback are in luck; the recent dip has NFLX testing a historically bullish trendline.
Per Schaeffer's Senior Quantitative Analyst Rocky White, NFLX is within 0.75 of the 80-day trendline's 20-day average true range (ATR), after spending at least 80% of the last 10 days and 80% of the last two months above it. This has happened nine other times over the past three years, after which the equity was higher one month later 89% of the time, averaging an 11.1% gain. A move of similar magnitude from the stock's current perch would put it at $1,361.66 -- a new record high.
When weighing in on Netflix stock's next move, call options look like a good way to go, as the aforementioned signal expires after a month. Plus, options traders are pricing in low volatility expectations at the moment, per NFLX's Schaeffer's Volatility Index (SVI) of 25%, which ranks in the low 5th percentile of its annual range.
