This afternoon, after the stock market close, Netflix(NFLX) will be reporting earnings. This should provide an interesting case study in how fundamentals vs technicals plays out. The stock has been making ATH’s until recently, based on good fundamentals. While it’s valuation(like most growth stocks) grossly over prices it’s likely future earnings, the technicals show a topping pattern that indicates whatever good news there has been and likely might have in future quarters, is fully priced in.

The stock is going lower, maybe not tomorrow, but soon enough. I will just be watching for now because from past experience it’s options are always way overpriced just in front of the earnings release. An interesting point is that at least over the last three or four earnings releases, NFLX always released their earnings on a Thursday afternoon, leaving only one day before the Friday weekly options expired.

Despite that, one could only get a reasonably priced put for so far away from the current price that it was practically impossible to make any money. I don’t know why they changed this particular earnings release to give option traders three full days before expiration? A gap fill around 876 either today or tomorrow should lead to a downside reversal, sooner or later. My target would be the first gap just below 700. (This is not investment advice, just my opinion.)