The universe of weekly options will expand by two names this
week, giving investors a chance to place short-term bets on Netflix
and long-term bonds.
Chicago Board Options Exchange announced yesterday that NFLX and
the iShares Barclays 20+ Year Treasury Bond Fund (
) will have contracts expiring on Sept. 10 in addition to the
standard monthly options that come due one week later.
Both names have been growing in popularity recently and enjoyed
big runs. NFLX has more than doubled this year on strong demand for
its online movies and snail-mail DVDs. It got a further boost
yesterday on the announcement that its videos will be streamed via
the new Apple TV service.
The advent of weekly expirations marks another milestone for
NFLX as a major name in the world of options. It already trades
more than 21,000 contracts a day, putting it ahead of companies
such as Google, Amazon.com and Oracle, which are 7-20 times bigger
in terms of market cap. It traded more than 1 million contracts
last month -- a 300 percent increase from January, according to
data from Options Clearing Corp. GOOG and AMZN also have weekly
Treasuries have also been gaining attention as volatility in the
stock market drove money into fixed income as a safety trade. TLT
tracks the "long end" of the yield curve, where bond prices are
more sensitive to changes in underlying interest rates. For
instance, the fund has had annualized volatility of 18 percent over
the last 30 days, while the iShares Barclays 1-3 Year Treasury Bond
) only moves by about 1 percent.
Just as activity is heating up in NFLX, things are also getting
more interesting in TLT: Realized volatility is 22 percent in the
last 10 days and about 16 percent in the last 50 days, indicating
that volatility has been mounting in the last two weeks.
The new weekly options couldn't come at a more opportune time --
especially because they begin trading on Friday morning, just one
hour after the Labor Department releases non-farm payrolls for
August. If the report is strong, TLT will likely get crushed.
(Chart courtesy of tradeMONSTER)