Why This Trader Will Short Netflix Into Earnings

Fari Hamzei is a weekly guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick. Tune in to the daily broadcast live Monday-Friday at 8 a.m. ET here.

On today's #PreMarket Prep, Hamzei Analytics Founder Fari Hamzei recommended that traders get a little short Netflix, Inc. NFLX heading into earnings. While he has not yet developed a specific strategy before tonight's report, he did note that he believed the stock has experienced its run-up heading into the report – and that it was poised for a correction.

Hamzei said that the recent spat of upgrades did not concern him, arguing that the Wall Street firms are typically late to the party. Over the past month, these upgrades have helped move Netflix 8.4 percent higher at current price ($474.43).

Hamzei also noted that he might do a "lotto" option purchase on the upside, in case the stock moves substantially higher. He said that he would not sell the straddle, despite the fact that it implies a near 10 percent expected move.