Online streaming giant Netflix is facing fierce competition from other competitors offering media on demand with their own streaming services, such as Apple and Disney. Will the competition’s foray into the streaming services space encroach on Netflix’s market share and thus, reveal itself in its fourth quarter earnings report?

Activity from traders is showing that investors aren’t in for a major shock when the earnings reveal takes place. One way to determine this is to examine implied volatility.

“Despite rising fears of streaming service competitors such as Disney +, the option market is lukewarm regarding Netflix’s potential for a major earnings surprise on Monday,” said Garrett DeSimone, Head Quant at data company OptionMetrics. “Implied Volatility on options is hovering near 60%, which is near the norm of previous earnings for April and July 2019. This is in contrast to October earnings, which had a pre-event runup over 70%.  Large implied volatility values imply that the options market expects higher expected price swings in the future.”

“Investors had a bigger anticipation of a surprise in October as opposed to this Monday’s coming announcement,” DiSimone added.

Here are some ETFs to watch with heavy Netflix allocations as of Jan. 20:

  1. MicroSectors FANG+ ETN (NYSEArca: FNGS)–9.185: seeks to link the return to the performance of the gross total return version of the NYSE® FANG+™ Index. The index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies. The notes are unsecured and unsubordinated obligations of Bank of Montreal. Each note will have an initial principal amount of $50.

  2. Invesco NASDAQ Internet ETF (NASDAQ: PNQI)–7.80%: The investment seeks to track the investment results (before fees and expenses) of the NASDAQ Internet IndexSM. The fund generally will invest at least 90% of its total assets in securities that comprise the underlying index. The underlying index is designed to track the performance of the largest and most liquid U.S.-listed companies engaged in Internet-related businesses that are listed on one of the three major U.S. stock exchanges.

  3. Invesco Dynamic Media ETF (NYSEArca: PBS)–4.94%: seeks to track the investment results of the Dynamic Media IntellidexSM Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying intellidex. The underlying intellidex was composed of common stocks of U.S. media companies. These companies are principally engaged in the development, production, sale and distribution of goods or services used in the media industry.

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