NFLX investors looking to add more to current positions

NETFLIX INC ranked among the best performers today. It delivered +2.33% to close at 369.61. During the last week it delivered +0.53% and saw a maximum drawdown of -1.76% before bouncing back.

Buy-and-Hold investors in NFLX experienced a maximum drawdown of -24.39% over the last three months. It fell by -3.87% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

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Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

NFLX has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 22 Jul, 2016 to 11 Jul, 2018. Over the last 2 years and 9 months, NFLX outperformed the SP500 index on 52% days.

During the last three months NFLX was mostly loss making and delivered on average -0.03% per day. It's best return during this period (of +5.79%) was on Friday, 24 Aug, 2018. While it's worst loss in the same period (of -6.17%) was on Wednesday, 5 Sep, 2018. The longest stort-term trend during this period was 6 losing days, which started on 10 Aug, 2018 and ended on 17 Aug, 2018. This bearish trend lost -9.7% of investor capital.

During the last year NFLX had 10 profitable months and 2 loss making months. Profitable number of months of NFLX and SP500 index were the same. NFLX significantly outperformed SP500 index in Jan 2018, when it returned +34.43% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NFLX had a longer winning streak of profitable months than SP500 index. It went up in 7 straight months (from Dec 2017 to Jun 2018) during which period it delivered +81.27%. It is interesting to note that both NFLX and SP500 index significantly outperform during months when quarterly/annual results are announced.

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NFLX is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing decrease in volatility. During the last three months, there was a significant fall in NFLX's volatility from 25 Jun, 2018 to 14 Aug, 2018. While there was a significant fall in the SP500 index's volatility from 25 Jun, 2018 to 28 Aug, 2018.

Advanced/professional short-term investors should note that NFLX has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in NFLX derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than NFLX. Therefore, SP500 must receive a lower allocation than NFLX in your portfolio. SP500 index usually has shorter drawdown period than NFLX.

On a general note (since you are interested in NFLX), two instruments that have been extremely volatile in recent times are AST and IMTE. Investors in these instruments should consider reducing their exposure (to AST and IMTE) and diversifying their portfolios.