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On Friday’s CNBC’s Options Action, the crew analyzed the performance of Netflix (NFLX) going into its earnings announcement on January 22nd. Expectations and estimates for earnings are extremely high, putting an elevated risk of missing their targets. After breaking above its $190 resistance level, it had a strong rally into earnings, providing an opportunity for a check back. Coupled with a very frothy valuation and trading at extremely high multiples of next year revenue projections, Michael Khouw suggests buying a Feb 220/195 Put Vertical for a $7. Credit.

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: NFLX Options Action

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