Netflix Spread Betting Guide

Netflix Spread Betting Guide

Netflix Spread Betting Guide

arrow_forwardLive Netflix Chart
arrow_forwardLive Netflix Prices
arrow_forwardWhere to Spread Bet on Netflix
arrow_forwardHow to Spread Bet on Netflix


Live Netflix Chart and Prices



17 October 2017: Netflix Q3 2017 – On Track To Beat $11bn in 2017 Revenue

Netflix’s Q3 results are out and the US company reported a 29% increase in the key “net new subscribers” figure.

According to Chris Beauchamp, Market Analyst at IG:

Further gains are still expected in subscriber numbers despite it slowly raising prices to help pay for all the shiny new content.

Netflix seems to have struck a ‘Goldilocks’ balance of increasing both user numbers and prices. Maintaining that delicate act will become harder as its rivals play catch-up.

Spread Betting on NFLX?
The US tech firm increased subscriptions costs last week but rather than denting the share price that sent the stock to all time highs, hitting $200 for the first time.

The share price is up 60% this year which is handy when you compare it the S&P 500 (up 14%), Disney (down 7%), Time Warner (up 5%) and CBS (down 11%).

For more on the Q3 report see the Forbes article: Netflix Is On Track To Exceed $11B In Revenue This Year.


18 July 2017: Netflix Shares Surge… Be Careful… Be Very Careful!

The US video streaming company has announced that it now has about 104m subscribers.

Netflix shares shot up +10% in after-hours trading after announcing Q2 results.

Key Q2 2017 Numbers:

  • arrow_forward5.2m members added in Q2
  • arrow_forwardInternational members now account for about 50% of subscribers
  • arrow_forward32% rise in Q2 revenues to $2.8bn
  • arrow_forward$3bn in revenues expected for Q3
  • arrow_forwardQ2 profits up to $65.6m (up 60% compared to Q2 2016)
  • arrow_forwardThe firm say the good growth is due to investing in “great content”
warning This is all looking very healthy and rosy… but a warning… like the great success story of Amazon, the stock also looks very overpriced.

The Netflix chart shows one way traffic since 19 July 2016 when the share prices was around $85.50.

The Netflix share price is now trading around $161.50 and that gives the one-time unicorn a market cap of about $70bn.

If you think that’s difficult to justify on the back of quarterly profits of $65.6m you might be right… and the Price Earnings ratio is saying the same thing, it’s an amazingly high 210!

For the latest PE ratio and market cap numbers see the Yahoo Finance Netflix page.

Time to Short NFLX?

Looking at the fundamentals it’s tempting to short the stock.

But… the chart looks like a freight train and I’m not standing in front of it.

I’ll sit this one out.


Where Can I Spread Bet on Netflix?

Most spread betting brokers will offer markets on the bigger US stocks including Netflix.

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How to Spread Bet on Netflix

For example, let’s say that you want to spread trade Netflix, you go on a spread betting site, e.g. IG, and they are offering the real time market priced at:

Netflix Rolling Daily: $103.39 – $103.55

Here is how it works.

The Market Netflix Rolling Daily
The Spread $103.39 – $103.55
How the Spread Works Now you can trade on the Netflix Rolling Daily market to go:

  arrow_upward  Above $103.55, or
  arrow_downward  Below $103.39

This spread betting market is a ‘Rolling Daily’ market which means that there is no expiry date for this trade. If you haven’t closed your position and the session ends then your trade will roll over into the next trading day.

Note: if a trade does roll over then you will normally either be credited or charged for overnight financing based upon the direction of your bet.

For more on this, please read our guide to “daily spread betting”.
Units (Points) Traded Spread betting trades on the Netflix market are priced in £x per cent.

Where a cent is $0.01 of the US share’s price movement.

E.g. if Netflix changes by 30¢ ($0.30) then you would lose/win 30 multiples of your stake.
Trade Size You work out how much you want to trade per cent, e.g. £2 per cent, £4 per cent, £8 per cent etc.
Simplified Trading Exercise If, as an example, you decided on a stake of £5 per cent and Netflix moves by $0.34 (34¢), you would win/lose £5 per cent x 34¢ = £170.


Worked Spread Betting Example | Buying Netflix

Spread betting on the US stock to rise

You Now Choose to Go Long or Short Netflix to push:

  arrow_upward  Above $103.55? or
  arrow_downward  Below $103.39?

Let’s Assume You Decide to Go Long   arrow_upward  Above $103.55
You Select Your Stake Size, Let’s Assume You Choose £2 per cent
So Now What?
  • You will win £2 for each cent ($0.01) Netflix rises above $103.55
  • Your trade loses £2 for every cent ($0.01) Netflix falls lower than $103.55
If You Are Buying a Spread Bet Your Profits/Losses = (Final Value – Initial Value) x stake per cent
 
Trading Situation 1 Netflix increases and the market is adjusted and moved to $104.20 – $104.36.
Time to Take a Profit? At this point, you could choose to leave your bet open or close it, i.e. close your trade to lock in your profit. In this case you opt to settle your position by selling at $104.20.
Your Profits/Losses = (Final Value – Initial Value) x stake per cent
($104.20 – $103.55) x £2 per cent
$0.65 x £2 per cent
65¢ x £2 per cent
Your Profits/Losses = £130 profit
 
Trading Situation 2 Netflix moves lower and the financial spread betting market is revised to $102.83 – $102.99.
Restrict the Loss? At this point, you may opt to leave your bet open or close it, i.e. close your spread bet and limit your losses. In this instance you choose to settle your bet by selling the market at $102.83.
Your Profits/Losses = (Final Value – Initial Value) x stake per cent
($102.83 – $103.55) x £2 per cent
-$0.72 x £2 per cent
-72¢ x £2 per cent
Your Profits/Losses = -£144 loss


Fully Worked Trading Example | Taking a Bearish View of Netflix

Spread trading on the American entertainment firm’s shares to move lower

You Now Decide Whether to Buy or Sell Netflix going:

  arrow_upward  Above $103.55? or
  arrow_downward  Below $103.39?

Let’s Assume You Choose to Go Short   arrow_downward  Below $103.39
You Choose How Much to Risk, Let’s Say You Opt For £1 per cent
What Happens Now?
  • Your trade loses £1 for every cent ($0.01) Netflix goes above $103.39
  • You will win £1 for every cent ($0.01) Netflix decreases below $103.39
If You Go Short With a Spread Bet Your Profits/Losses = (Initial Value – Final Value) x stake per cent
 
Trading Situation 3 Netflix slips and the spread trading market moves to $102.20 – $102.36.
Close and Take Your Profit? You may choose to keep your position open or close it and lock in a profit. For this example, you decide to close your bet by buying at $102.36.
Your Profits/Losses = (Initial Value – Final Value) x stake per cent
($103.39 – $102.36) x £1 per cent
$1.03 x £1 per cent
103¢ x £1 per cent
Your Profits/Losses = £103 profit
 
Trading Situation 4 Netflix climbs and the spread betting market becomes $104.39 – $104.55.
Time to Limit the Loss?At this point, you could choose to leave your spread bet open or close it, i.e. close your trade and restrict your loss. In this instance you opt to settle your position by buying the market at $104.55.
Your Profits/Losses = (Initial Value – Final Value) x stake per cent
($103.39 – $104.55) x £1 per cent
-$1.16 x £1 per cent
-116¢ x £1 per cent
Your Profits/Losses = -£116 loss


Netflix Notes:

  • Financial spread betting prices as per IG as of 17 October 2016
  • Most firms will also give you the option of trading on the US entertainment firm in euros/cent and US dollars/cent

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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