When it comes to entertainment content, Netflix Inc. (NASDAQ:NFLX) easily represents the dominant brand, forcing legacy media giants to play a game of catch-up in the streaming landscape. For years, Netflix has been able to swat away the competition — and the blistering rise of NFLX stock serves as clear evidence. However, sustained dominance is no guarantee. With rivals chipping away at the juggernaut, both bulls and bears have a solid case to make.
Presently, the winds appear to mostly favor Netflix, with the technical charts providing the receipts. Since the beginning of this year, NFLX stock has gained over 35%. In the trailing 52 weeks, it's up just a hair above 70%. Furthermore, the security's price action has been firmly above the 200-day moving average throughout this year — with only a brief scare in April.
However, circumstances haven't been consistently clean. In the first half of 2025, NFLX stock has gained roughly 50%. In the second half so far, NFLX is down about 10%. Granted, the arbitrary cutoffs and incomplete timeframes do not make these comparisons an apples-to-apples case. However, it does demonstrate that despite Netflix's financial performances — where it has beaten top-and-bottom-line targets in the past six consecutive quarters — investors can get restless.
There's no doubting that Netflix is a prime beneficiary (as well as a key driver) of linear television's disruption. Thanks to its enviable content library, the company fuels a flywheel of subscriber growth, rising revenue and expanding profit. At the same time, competition is very much heating up, with YouTube in particular imposing a critical challenge.
If that wasn't distracting enough, President Donald Trump recently sparked concerns about tariffs on movies made outside the U.S.
Looking at recent options market transactions, the various trades seem to tell a convincing narrative about NFLX stock. On Sept. 24, Benzinga's options screener identified sweeps (or large orders that are the equivalent of market orders for institutions) for $1,200 calls expiring two days later. Interestingly, that was the only major transaction on that day carrying bullish implications.
The rest of the options featured bearish sentiment, with most of the transactions representing credit-based structures while some were debit-based trades, thereby directly betting that NFLX stock would drop in value.
To be fair, it's impossible to declare with absolute authority what the true intentionality is behind options trades. But mechanically, these transactions would really only be effective for the debit buyer or credit underwriter if volatility materializes.
Bottom line? From a technical standpoint, NFLX stock has near-term believers. Increasingly, though, more traders appear to be betting against Netflix.
The Direxion ETFs: With the two sides of the sentiment spectrum locked in fierce battle for control, financial services provider Direxion provides an intriguing avenue for speculation with two countervailing exchange-traded funds.
First, the upwardly ambitious may consider the Direxion Daily NFLX Bull 2X Shares (NASDAQ:NFXL), which seeks 200% of the performance of NFLX stock. On the other side, the Direxion Daily NFLX Bear 1X Shares (NASDAQ:NFXS) tracks 100% of the inverse performance of the namesake equity.
Easily, one of the reasons why investors gravitate toward Direxion's leveraged and inverse products is the ability to speculate without resorting to derivative mechanisms such as options. Another overlooked advantage is that these ETFs are debit-based transactions. Unlike credit-based trades, the speculator is not subject to tail risk, which is the threat of an ever-rising obligatory payment as the underwritten risk gets realized to the extreme ends of the distribution.
In other words, the risk of loss is limited to whatever investors put into the trade.
Still, prospective participants must exercise extreme caution with leveraged and inverse ETFs. For starters, these products tend to be far more volatile than funds tracking major indices such as the Nasdaq Composite. Second, Direxion ETFs are designed for exposure lasting no longer than one day. Otherwise, going beyond the recommended holding period may expose unitholders to decay tied to the daily compounding effect.
The NFXL ETF: Since the beginning of the year, the NFXL ETF has seen a robust performance, gaining nearly 53%. However, a consolidation cycle has materialized in the second half of the year.
- Currently, momentum favors the NFXL ETF, with the price action trending above the 200 DMA. However, it's also slightly below the 50 DMA, raising some concerns.
- Looking ahead, volume levels need to be monitored closely. So far, accumulative volume appears to have peaked in July, raising questions about forward viability.
The NFXS ETF: So far, Netflix skeptics haven't had much reason to rejoice, with the NFXS ETF down 30% on a year-to-date basis.
- In a flipped environment, the NFXS ETF currently trades well below the 200 DMA. However, it happens to be above the 50 DMA, raising eyebrows.
- To be fair, accumulative volume has also been fading. However, the most recent sessions may indicate a gradual rise in demand.
Featured image by Tom Majric from Pixabay.
