VantagePoint Trading Software is a forecasting tool that uses both end of day data and Artificial Intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The Artificial Intelligence software forecasts market movement for stocks, futures, Forex, ETFs and Cryptocurrencies. Netflix, NFLX stock, is in focus today…

This journal entry looks at the recent market movements of Netflix NASDAQ: NFLX

VantagePoint Trading Journal NFLX Stock

Members of the European Parliament will get to question Facebook (NASDAQ:FB) CEO Mark Zuckerberg today on everything from Cambridge Analytica and Europe’s new privacy rules to the social network’s role in elections and foreign investment. He’s also expected to apologize over not taking a “broad enough view of our responsibilities” and not doing “enough to prevent the tools we’ve built from being used for harm.”*Source:  Seeking Alpha

The early trade markets are essentially unchanged.  I am still willing to consider strong indications of bullish momentum.

We turn to Netflix today (ticker: NFLX):

The VantagePoint platform recently indicated a potential upside breakout in NFLX could be forming due to a bullish crossover between 5/18/18 and 5/21/18.

Using the predictive indicators embedded within the VantagePoint Software and its predictive AI technology, we will point out three significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average between 5/18/18 and 5/21/18. We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN position that same day.  This indicator measures strength and weakness for a 48-hour period, in this case strength.  The move to the GREEN position further makes the case for a potential bullish scenario. Additionally, we see that the predicted high and low for today’s range is above the actual high and low from yesterday’s session.  I want to play the VP bullish indication.

Strategy Discussion

If one were a straight stock trader, simply buying NFLX in the $332.00 area could prove to be prudent. You are anticipating a move to the upside. It’s also a conservative way to enter NFLX without the limitation of time associated with other strategies. In this scenario, it would also be good practice to place a sell-stop order in the $325.00 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit call spread may be one way to approach this situation.  The first thing you want to do is calculate your target strike.  In order to do this, you need three pieces of information. The current price, date of expiration and at the money implied volatility for that expiration.  For NFLX, this calculation targets the $345 – $346 strike.  You may want to consider buying the June 1st weekly expiration 340/345 call spread paying $1.20.  The maximum risk is what you paid for the spread and the maximum reward is the width of the spread less any premium paid.  Max risk = $1.20, max reward = $3.80 which yield a reward to risk ratio of 3.16:1.

Traders must evaluate the trading and market environment outlined above. A trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

Use smart software to your advantage

VantagePoint Software uses the power of Artificial Intelligence. This is what traders use to predict market direction and strength 1-3 days in advance with up to 86% accuracy.  With deep learning using neural networks, VantagePoint can show you what the market is going to do instead of what it’s already done. Request a personalized demonstration of VantagePoint Software today. Learn why more than 25,000 traders trust the software, which helps them achieve trading success.