Netflix (NFLX), a company suffering punishing competition recently from larger rivals such as Apple (AAPL), Amazon (AMZN) and Blockbuster (BBI), will begin showing movies and TV shows over the Internet this week.
An audio podcast of this article is available at: poweropt.com/podcasts/2007_01_17_Netflix.mp3
The feature will be called “Watch Now” and will be a streaming video feature. This move is the first in the industry attempting to acknowledge the inevitable shift in technology. Shares of Netflix were buoyed over 6% before the bell this morning on the news.
The feature will initially be only offered to a limited number of Netflix subscribers as a trial. The company will make the service available to its nearly 6 million subscribers by doling out access to an additional quarter-million viewers each week between now and mid-June.
The service will allow viewers to watch six to 48 hours of content per month, depending on their level of Netflix membership. The service will provide users access to approximately 1000 titles.
Netflix CEO Reed Hastings is hoping to capture the vital under-30 market who lifted upstarts like youtube.com to success.
A Reuters’s article reported Hastings as saying, “For consumers under 30, they are doing so much with online video this is a natural extension of their usage paradigm on a laptop. Eventually we want to be on every Internet-connected screen from cell phones to computers to big screen plasma TVs but the starting place is the PC.”
A prominent JPMorgan analyst, Barton Crockett, recently downgraded Netflix’s rating. Jim Cramer, the famed TV pundit and analyst, stood behind the stocks saying Crockett’s downgrade was based on an erroneous survey.
The following is a look at potential Netflix trades found using PowerOptions’ dynamic suite of web-based search tools.
|Covered Call Netflix Inc. (NFLX) $ 22.74 (31 Days)|
|QNQBX||07 FEB 22.50||$1.90||8.40%||8.00%||8.00%|
|QNQBE||07 FEB 25.00||$1.00||4.40%||4.60%||15.00%|
The first covered call trade, an in the money covered call, offers 8.4% downside protection and a potential profit of 8.0% (31 days) if the stock remains unchanged or rises.
The second covered call trade, an out of the money covered call, offers 4.4% downside protection and a potential profit of 4.6% if the stock remains unchanged. If the stock rises above the $25 option strike price, the potential profit becomes 15.0%.
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[tags]Watch Now, Reed Hastings, youtube.com, JPMorgan, Barton Crockett, Jim Cramer, AAPL, Apple Computer Inc., AMZN, Amazon.Com Inc., BBI, Blockbuster Inc., MOVI, Movie Gallery Inc., NFLX, Netflix Inc., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]