TradeUpdateJan26th,2012?

WithNFLXgappingupcloseto19%onabeatandraiseqtr,theCalendarcallspreadthatIboughtyesterdayshouldperformfairlywellwiththestockthroughmystrikesAtthispointIamgoingtowatchthisoneverycloselyasmyshortweeklycallswillstarttodecayveryquicklywith2daystoexpiration。

OriginalPostJan25th,2012?

Q4Report,ExpectationsandtheImpliedMove。

NFLXreportsQ4earningstonight。

-Theoptionsmarketisimplyingabouta14%movevsthe4qtraverageofabout16%?

Remember?

thatthestockwasdownabout35%lastqtrsotheprevious4qtravg?

excluding?

lastQwasabout8%。

-Thestockisalreadyupabout36%ytdafterfallingover70%lastyear?

-Valuationisstilloffthechartsasthecompanyisbasicallyexpectedtobreak-eventhisyearastheybuildouttheirInternationalofferings,spendlotsofcashtoacquirecontentandtransitionfromhighermarginDVDsubstostreamingmodel。

SomeofyouhaveaskedabouttheImpliedmoveandweareworkingtocreateatoolwhereyouguyscanfigureonyourown,ittakesalittle?

quantitative?

and?

qualitative?

knowhow,sointhemeantimewhilewefigurethebestwaytopresentitbearwithus。

IntheinstanceofNFLX,withthestockabout$95andweeklyoptionsontheweekoftheeventwecanfigurethismovebytakingtheatthemoneystraddle,inthiscasetheJanweekly95straddle,whichisofferedatabout13。

75?

Inthiscaseyoucandividethepremiumbythestockpriceandgettheapproximatemove。

basicallytobreak-evenbyFridayyouneedthestock108。

75orhigheror81。

25orlower。

BloomberghadanicelittlePreviewhere:

Netflixmaygiveupdateonsale

windowforfilmsfromstudios,subscriberchurnwhenitreports

4Qpostmkt。

ESTIMATES:



4QGAAPEPSest。

54c(range40c-70c);forecast36c-70conOct24



4Qrev。

est。

$856。

96m(range$817m-$895m);forecast$841m-$875m



4Qgrossmarginest。

30。

4%(range25%-34。

2%)



1QGAAPEPSest。

lossof29conrev。

$845。

6m



2012GAAPEPSest。

lossof2conrev。

$3。

59b

SUBSCRIBERFORECASTS:



CompanySubcriberforecastsfor4QvsaverageofWedbush,

PacificCrestestimates:

**Domesticstreaming20m-21。

5mvsest。

21m

**DomesticDVD10。

3m-11。

3mvsest。

10。

78m

**International1。

6m-2mvsest。

1。

8m

WHATTOWATCH:



Listenforupdateonsalewindowfromstudios;Dish,Redbox

fighting56-daydelay{NSNLXEANY6VDKII}



Lookforcommentsrelatedtochurn



Competitivepressures:AMZNconsidersblosteringitsvideo-

streaming,saysNYPost{NSNLYC9BI6S9728}

MYVIEW?

Ithinkthestocklikelycomesoffalittleasinvestorsdigestsomenewguidancefor2012?

Ithinkthereisstillafairly?

strong?

bidforthestockatcurrentlevels,andwhileIamnotlookingtoplaythequarterIwanttofadean?

exaggerated?

out-sizedmovetotheupside?

Alsolikesellingthe2dayoptiontobuythelongerdatedasanypotentialtake-oversituationmaytakealittletime。

NEWTRADE:Bought?

NFLXJan/Mar115CallSpreadfor3。

15

-SoldJan115Callat1。

14

-BoughtMar115callfor4。

29

Break-EvenOnJan27thweeklyExpiration(Friday):

Ifthestockis115orlowertheJanwkly115callexpiresworthlessandyouessentiallyowntheMar115callfor3。