Netflix shares reached their highest point on July 1 but then entered a downward trend, dropping from $1,341.15 to a low of $1,144, just above the 38.2% retracement level. After hitting that low on August 5, the stock started to recover, breaking through key resistance levels like the 50-hour and 100-hour moving averages. It is now facing the challenge of the 200-hour moving average. Tomorrow’s stock performance is crucial for maintaining the current rally, with a potential target of $1,242.93, the 50% midpoint. However, if it fails to hold above the 200-hour moving average, the stock may dip back to around $1,200. Netflix’s impressive lineup, such as Squid Game Season 3 and other hit series, has driven strong viewer engagement and kept subscribers coming back. To keep up the momentum, Netflix is releasing new shows like Wednesday Season 2 and other major originals. The company’s strategy to create local content has led to a €1 billion investment in Spanish programming, boosting its international presence. Additionally, its growing ad-supported tier and foreign exchange gains have increased international sales, prompting a higher revenue forecast for 2025, projected between $44.8 billion and $45.2 billion. As of August 12, 2025, Netflix is at an important technical point after rebounding from its early August low. The stock is fighting to remain above the 200-hour moving average, a crucial battleground. If it can maintain its upward trajectory, it might reach the $1,242.93 level in the coming weeks. Traders feeling optimistic might consider buying call options. If the stock breaks through current resistance, this could trigger a rapid rise. Recent options data shows that 30-day implied volatility for Netflix is now around 29%, down from over 35% during the July decline, making calls less expensive. We would recommend focusing on September expirations with strike prices around $1,250 to capitalize on a potential move toward the 50% retracement target. For those who prefer a more cautious approach, a bull call spread could help manage risk while still allowing for potential upside. This involves buying a call with a $1,220 strike price and selling a call with a $1,250 strike price, setting a clear profit zone. Yesterday’s trading volume showed increased interest in calls between these two strike prices, indicating it’s a popular strategy. It’s important to recognize the risk if the stock fails at this technical level, as this could push the price back toward the $1,200 support area. To hedge against a long position or to bet on a decline, buying put options with a $1,200 strike expiring in late August would be a sensible strategy. A similar situation occurred in late 2024, when a failure at the 200-hour moving average after a strong rally led to a quick 10% drop within a week. This trading environment is bolstered by a broader bullish market, with the S&P 500 and NASDAQ reaching new highs today. Influential figures like Rick Rieder have shared positive outlooks. Netflix’s strong fundamentals, along with an upgraded 2025 revenue forecast of over $44 billion and a robust content lineup, provide significant support. Furthermore, data indicating the ad-supported tier’s growth, which now represents nearly 25% of new global sign-ups, further solidifies traders’ confidence.

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