January 26, 2011

As per the prior post, earlier we sold 90% of our $NFLX position at $183. After the earnings, at this time the stock is trading at $201. Key driver of the stock’s up move is short covering prompted by rise of subscribers to over $20,000,000.00 . 

First resistance is around $225. We will carefully watch the price action if the stock moves to the resistance to decide on the remaining 10% position. We will also maintain a stop loss at $173.7

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Netflix reports earnings after the close today. The risk of large price movement in both directions is high. NFLX can easily fall 50 points or go up 30 points.

We will stick with the discipline of the ZYX Change Method , and not let our substantial gains disappear. Options are too expensive to hedge, Stops will be ineffective in a potential gap situation.

We will take gains on 90% of the position right here around $183.