My Next Option Trading Idea - NFLX

This is my next option trading strategy…

Align S&P500 1320 level with NFLX at $240 level. If NFLX is trading at or above $240 as S&P500 hits 1320 level today, then I plan to buy PUT Option for NFLX ($220 Target for May) and ride down towards $230. Sell once it reaches $230 level. When NFLX reached $240 range earlier this year, it tanked below $200. I think it will take a similar course again but this time it will not fall as steep as before. Maybe $220 level…

Keep in mind that you have to know when to exit your position if it does not work out the way you expected. I recommend selling immediately if S&P500 continues to go higher... Once it crosses $1325, I take it as a sign to exit your position even though it could be a "BULL TRAP".




UPDATED COB 3/29/11:
The way the stock market closed today near 1320 for S&P500, I think it will be a great time to short next couple of days.  I was hoping that NFLX would close near $240 but it only made it to $237.  I would buy PUT Option for NFLX tomorrow AM (wait until at least 9:50am or so) if the market opens slightly higher.  If it opens much higher, then all bets are off...  If it opens lower then I would wait for it to come back to 1320 level again before entering PUT position.


By the way, did anyone buy PUT Option for TM recently?  It should continue to decline...