NFLX Options Signal High-Risk Rebound: Focus on $1200 Calls and $1100 Puts as Tax Dispute Looms

• Netflix (NFLX) shares fell 9% after Q3 earnings missed forecasts due to a $619M Brazilian tax charge.
• Options data shows heavy call open interest at $1200 (7765 contracts) and put open interest at $1100 (5996 contracts) for Friday expiration.
• RSI at 42.7 and Bollinger Bands suggest price could test $1134.83 support or $1197.38 midline.

Here’s the core insight: NFLX options traders are hedging for a volatile rebound. The stock’s 0.5% intraday drop masks a war between bulls eyeing a $1200 breakout and bears bracing for a $1100 collapse. With the put/call ratio at 0.98 (nearly balanced), the market isn’t leaning strongly in either direction—but the tax dispute creates a ticking clock.

Where Bulls and Bears Are Betting Chips

The options chain tells a story of cautious optimism. For Friday expiration, the $1200 call (OI: 7765) is the most watched strike, suggesting some traders expect a sharp rebound to offset Wednesday’s selloff. Meanwhile, the $1100 put (OI: 5996) acts as a floor for those fearing a deeper pullback. The next Friday’s $1150 call (OI: 1349) hints at longer-term bullish positioning, but the $1000 put (OI: 1906) shows bearish hedges are still in play.

This isn’t a classic “buy the dip” scenario. The tax dispute isn’t resolved—Netflix’s $619M charge was a one-time hit, but the legal battle could resurface. Heavy call interest at $1200 implies some traders see a path to $1250+ if the stock rebounds, but the RSI at 42.7 (below oversold 30) suggests a bounce isn’t guaranteed. The danger? If the stock fails to hold above $1134.83 (lower Bollinger Band), the $1100 put could become a magnet for panic selling.

Tax Dispute: Catalyst or Distraction?

The Brazilian tax issue is both a headwind and a tailwind. On one hand, the $619M charge dragged down Q3 margins and scared investors. On the other, the company expects Q4 revenue to grow 17% again, matching prior trends. The key question: Will the tax dispute linger as a cloud, or is it a one-off? Netflix’s guidance for 29% full-year operating margin (down from 30%) shows management isn’t ignoring the issue, but the $11.51B revenue beat proves the core business remains strong.

Investor sentiment is split. Short-term traders are pricing in the tax risk (hence the $1100 put activity), while longer-term bulls see the dip as an opportunity to buy a streaming giant with 220M+ global subscribers. The challenge? Distinguishing between a temporary setback and a structural problem. For now, the market seems to treat it as the former—but don’t bet the farm on that assumption.

Actionable Trade Ideas: Calls, Puts, and Price Levels

For options traders, the NFLX 1200 Call (Friday expiration) offers a high-risk, high-reward play. If the stock closes above $1200 by Friday, the call could surge as short-term bulls capitalize on the rebound. Entry: $1110.95 (current price). Target: $1200+ if the stock breaks out. Risk: If NFLX stays below $1134.83 (lower Bollinger Band), the call could expire worthless.

Bearish traders might consider the NFLX 1100 Put (Friday expiration) as insurance. With the stock already down 9%, the put could gain value if the selloff accelerates. Entry: $1110.95. Target: $1100 support. Risk: If NFLX rebounds above $1197.38 (Bollinger midline), the put loses value.

For stock traders, consider a buy-the-dip entry near $1134.83 (lower Bollinger Band). If the stock holds this level, it could test the 30D support/resistance range of $1198.85–$1201.35. A break above $1197.38 (Bollinger midline) would signal renewed bullish momentum. Stop-loss: Below $1106.89 (intraday low) would validate the bear case.

Volatility on the Horizon

The next 72 hours will be critical. If Netflix’s stock holds above $1134.83 and the tax dispute gets some clarity (even partial), the $1200 call could become a breakout catalyst. Conversely, a breakdown below $1100 would validate the put-heavy positioning. Either way, the options market is pricing in a binary outcome: a sharp rebound or a deeper correction. The MACD (-4.77) and RSI (42.7) suggest the stock isn’t in freefall yet—but the 30D moving average at $1201.85 looms as a psychological hurdle.

Bottom line: NFLX is a high-volatility trade with clear risk/reward parameters. The options data isn’t screaming “buy” or “sell”—it’s hedging for both. Your move depends on whether you see the tax dispute as a speed bump or a pothole. For now, the market is watching $1200 and $1100 like they’re the last two seats on a rollercoaster.