How To Trade Netflix Stock Before And After Q3 Earnings – Netflix (NASDAQ:NFLX)

Netflix, Inc NFLX will begin big tech earnings on Tuesday when it prints its third-quarter financial results after the market close.

The battered stock rose in the morning trading session but fell in line with broader markets heading into the event to trade slightly lower.

The stock was trading sideways when the streaming giant released its second-quarter results on July 19, but the earnings release prompted Netflix to bullishly break into an uptrend.

For the second quarter, Netflix reported earnings per share of $3.20, beating Street’s estimate of $2.96. The company reported revenue of $7.97 billion, missing the consensus estimate of $8.04 billion.

Despite missing The Street’s revenue estimate, Netflix’s stock rose in the days that followed as, while the company had forecast losing 2 million subscribers over the quarter, Netflix reported a loss of 970,000.

For the third quarter, analysts are expecting earnings per share of $2.13 on sales of $7.84 billion. Retailers and investors will be watching closely to see if Netflix has been able to retain more of its subscriber base and attract additional users.

From a technical analysis perspective, Netlix stock looks neutral towards the event and needs Tuesday’s after-market candle to set some direction.

It should be noted that holding stocks or options over a profit squeeze is akin to gambling, as stocks can be bullish on a profit miss and bearish on a profit decline.

Options traders, particularly those holding short-term calls or puts, take on additional risk as the institutions writing the options increase premiums to account for implied volatility.

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The Netflix chart: Netflix has been trading mostly sideways since August 15, between around $211 and $250. Within the horizontal pattern, Netflix reversed course into an uptrend on October 13 and has printed a series of higher highs and higher lows on the four-hour chart.

• On the daily chart, Netflix has yet to confirm an uptrend by printing a higher low above $211. If Netflix falls after earnings pushes, bullish traders will want the stock to bounce off that level, while bearish traders will want to see the range lose, nullifying the possible upside and setting the stock into a likely downtrend.
• There’s a chance Netflix printed a bearish double top pattern on Monday as the stock surged to $250 and rejected the level as resistance. Netflix also rejected the territory on September 20.
• If Netflix gets a bullish reaction to earnings pressure, bullish traders will want the stock to climb firmly into the upper gap, which exists between around $248 and $333. Bearish traders can watch if Netflix rejects the 200-day simple moving average as resistance as the stock moves higher.
• Netflix has resistance above at $265.80 and $294.75 and support below at $227.68 and $212.98.

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