Reverse signal appears! Netflix (NFLX.US) has been entrenched in a bear market for a year, with bullish sentiment rising before its earnings release.

Netflix (NFLX.US) has endured a bear market for nearly a year, with a cumulative decline of nearly 20% this year, and its stock price has been sold off after the previous four earnings releases. However, before Netflix's earnings were announced on Thursday, options traders saw a significant increase in bullish sentiment. According to data from ThinkOrSwim, last Friday and this Monday, the trading volume of bullish options linked to Netflix was nearly three times that of bearish options. At the same time, one of the most popular trades was selling at-the-money put options. Technical signals also show positive signs. Currently, Netflix's stock price is around $75, similar to the level when the company abandoned the acquisition of Warner Bros. Discovery in February. At the end of 2021, Netflix's stock price began to plummet around this level, falling by as much as 80%, then experiencing a rebound for several years, reaching a peak of $134 in June of last year. Netflix's stock price trend Todd Gordon, founder and chief investment officer of Inside Edge Capital, said in an email, "Netflix is testing the rising 200-week moving average, as well as the $70 level that acted as resistance since the end of 2021 and was eventually broken through. If the $70 technical support level can hold, it may be time to consider buying Netflix again." According to data from Cboe LiveVol, options pricing currently indicates that Netflix's stock price will fluctuate by 7.6% after the earnings release, while the average actual volatility over the past year was 7.4%. Netflix's stock price has dropped after the last four earnings releases, while it has risen consecutively after the previous three. Media observers point out that as the company has not released any blockbuster titles in the past quarter, audience engagement has declined. Nielsen data shows that Netflix's TV viewing share has dropped to its lowest level in over a year. Rich Greenfield, co-founder and TMT analyst of LightShed Partners, said, "Netflix has not released any blockbuster titles this year. Nielsen data shows that its U.S. market user engagement has increased, but with the growth in total subscribers, the viewing time per user has slightly decreased. The viewing time of new ad package users is likely lower than that of existing ad-free members, changes in user structure are one factor, and intensified industry competition has also had a negative impact." The highest traded options contract on Monday was a put option with an expiration on Friday and a strike price of $75. A large seller sold 500 contracts of this option, earning nearly $150,000, boosting the activity of the contract. SpotGamma data shows that out of a total of 20,000 transactions involving this option contract on Monday, about 15,000 were sell transactions. Netflix is set to report earnings, with Wall Street optimistic Netflix is set to announce its second-quarter results after the U.S. market closes on Thursday, with market expectations of earnings per share of $0.79 and revenue of approximately $12.58 billion. The company had previously forecast second-quarter revenue of around $12.57 billion, a year-over-year increase of about 13.5%, while maintaining its full-year revenue outlook between $50.7 billion and $51.7 billion. Advertising remains a key business area for Netflix, with over 250 million global active viewers in its advertising business. The company also stated that it plans to double advertising revenue to around $3 billion by 2026 and expand its lower-priced ad subscription service to more international markets. Investors are also expected to closely monitor Netflix's subscription user trends, advertising monetization, and the latest developments in content spending, especially since co-founder Reed Hastings recently stepped down as chairman of the board. According to Tipranks data, overall, Wall Street analysts remain bullish on Netflix, with a consensus rating of "strong buy" and an average target price of $112.70, 53% higher than the current level.