Friday, September 16, 2011

Netflix was the play!

I’m so frustrated I didn’t get a piece of that action; I was so engrossed in playing Europe that I let Netflix slip right by my fingers.

The way to play high flyers with a lot of chatter (as Netflix has had) it to purchase way out of the money puts for a few cents.
Always purchase near-term puts so that they are cheaper, you have better odds of hitting a jackpot this way and it’s cheaper than playing the lotto.

Just three days ago you could have purchased the weekly 170 put for one cent- today its worth 10 dollars! If you had purchased 10 of these puts for 10 dollars, they would be worth 10 grand today.
As I mentioned earlier, I am a big fan of purchasing weekly puts on high flyers every so often; the payout beats anything else you could cook up with minimal risk.

All it takes for a high flyer is one slipup, one tiny mistake and it will lose 30% to 50% of its market cap almost in one day- huge money makers if you long way OTM puts!

Netflix isn't a buy just yet. The shorts aren't done having their fun yet. At some point it will be a good play for the upturn, but that time isn't just yet. The increased monthly fees are going to start rolling into the bottom line in a big way.

What’s the next Netflix you ask? Apple! Bears are chopping at the bit to take a bite out of that juicy market cap. Without Jobs at the helm they have a huge catalyst, one miss, one screw-up, one gaff and it will go down HARD!

One day, Apple will screw-up, you want to be long cheap puts when that happens.

One final note.
Buying weekly OTM puts on high flier is also a cheap way to hedge your portfolio against huge market corrections.

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