When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (NFLX) – TAKE PROFITS
SELL the Netflix (NFLX) MAY 2025 $850-$860 in-the-money vertical Bull Call debit spread at $9.95 or best
Closing Trade
4-24-2025
expiration date: May 16, 2025
Number of Contracts = 13 contracts
This has been one of my fastest home runs in the 17-year history of the Mad Hedge Fund Trader. I added this position when the Dow Average was down $1,100. It reaffirms my belief that the best time to buy a stock is when everyone else is throwing up on their shoes.
Since I added this position on Monday, (NFLX) has risen by an incredible $155, or 16.5%. We also caught a massive decline in option implied volatilities from 57% to 36%.
With 93% of the maximum potential profit in hand, the risk/reward of continuing for 16 more trading days is no longer favorable. Better to raise some dry powder here to save for the next trade, of which there will be many.
Where any options are actually trading today, with the Dow Average down $1,100, is anyone’s guess.
However, Netflix is one of the only stocks that is up off the back of a spectacular earnings report last week. (NFLX) is increasingly being viewed as a recession-proof stock, a good thing to have in the midst of a recession. Even if people lose their jobs, (NFLX) is the last thing they will cancel.
I have been trying to buy Netflix for years, but it has always been insanely expensive. Investors are willing to pay big premiums for reliable dividend and earnings compounders like (NFLX). For the last month, Netflix has been one of the best-performing stocks in the market, up 25%. I believe that (NFLX) will hit a new all-time high in the near future.
If we had a different president of the United States, I would be recommending a two-year LEAPS on Netflix right now. But the world is too uncertain and unstable to contemplate such long-term risk now. I‘ll wait for the recession versus depression to get settled first.
As far as I know, Netflix has no government contracts that can get cut any day without notice, a great risk to any share price these days.
As a result, you get to take home $1,620 or 15.12% in 3 trading days. Well done, and on to the next trade.
I am therefore selling the Netflix (NFLX) May 2025 $850-$860 in-the-money vertical Bull Call debit spread at $9.95 or best
Netflix is an American subscription video-on-demand streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple languages.
Launched in 2007, nearly a decade after Netflix, Inc. began its pioneering DVD by mail order rental service, Netflix is far and away the most popular streaming service today, with 301.6 million paid memberships in more than 190 countries as of today.
By 2022, "Netflix Original" productions accounted for half of its library in the United States and the namesake company had ventured into other categories, such as video games, mobile games, through its flagship service. As of 2023, Netflix was the 23rd most visited website in the world, with 23.66% of its traffic coming from the US, followed by the United Kingdom at 5.84%, and Brazil at 5.64%.
To learn more about the company, please visit their website at
https://about.netflix.com/en
This was a bet that Netflix would not fall below $860 by the May 16 option expiration in 16 trading days.
Here are the specific trades you need to exit this position:
Sell 13 May 2025 (NFLX) $850 calls at………….….......……$252.00
Buy to cover short 13 May 2025 (NFLX) $860 calls ………$242.10
Net Proceeds:………………………….………..…………...................$9.90
Profit: $10.00 - $8.60 = $1.30
(13 X 100 X $1.30) = $1,620 or 15.12% in 3 trading days.
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
