Netflix (NFLX) has been a painful holding over the past year, down about 42% to 43%. On the chart, NFLX sits below the communications sector ETF (XLC), which is down 6.2%. NFLX, Google/Alphabet (GOOGL), and Meta (META) make up the major parts of that sector. Among closer rivals, Roku (ROKU) stands out as the strongest name. Paramount Skydance (PSKY) sits in a similar spot to NFLX; both are tied to the fight for Warner Bros. Discovery (WBD).
The chart
NFLX had an uptrend off its 52-week lows at 6508, but that trend is now broken. Price has moved into a downward-sloping channel drawn between two white lines. It topped out near the red line at 84, then fell, hit a relative high at 81, and gapped down to around 70. The first green line marks the relative lows set after that gap down at 70. The second green line, at 6508, marks the 52-week lows.
The 5-day exponential moving average (EMA), the closest moving average, sits at 7113, and price is below it. The trend line lines up with the 21-day EMA at about 75, which stands for one month of trading. That spot is worth watching because two signals meet there.
RSI, a measure of momentum, is trending down. It is below the 50 midline but still above the 30 line. A drop below 30 would mark an oversold, more bearish signal. If price pushes past the recent lows near 70, that could speed up the move down and drive price toward the 52-week lows.
Volume shows where heavy trading sits. A large volume spike lines up with the recent gap down. Heavy volume on big moves points to strong conviction from traders, which adds weight to the move lower. The volume profile shows a node between 67 and 70, meaning heavier trading at those lower levels. There were also two larger volume spikes between about 72 and 78; those are spots to watch for possible consolidation on the way up.
NFLX looked like it might turn up after earnings and after the merger question settled away from the company, but price is now back near the 52-week lows.
The example trade
The expected move by the end of the week is about plus or minus 3%, shown as a small orange box. The monthly expiration on August 16th carries an expected move of plus or minus 6%, shown as a yellow box, and that is the focus for the trade.
The trade sells a 70/65 put vertical (October 16th) for a 180 credit, a neutral-to-bullish setup with only 17 days to expiration, so a shorter-term trade. Max profit is the credit received, $180. Max loss is $320. That is close to a one-to-two reward-to-risk ratio. With an expected move around 6%, the break even is 6820, about 2.6% to the downside, well inside that range. The aim is for price to hold above the recent lows and not drift much closer to the 52-week lows set within the past quarter.
