Sunday, May 29, 2011

Netflix (NFLX) Update

I've actually blogged about Netflix three times beginning on March 8th (here, here, and here), and my position has not changed by even one share since that first post, so like we did with Research In Motion a few days ago, let's keep this short by focusing on just the current trade:

- LONG the week of 12.29.08 at $29.87. My stop was $19.25, so that means my risk (R) on the trade was $10.62/share. Yesterday the stock closed at $264.51 with a $193.15 stop, so our gain over about 2 1/2 years is 785.5%, and the reward-to-risk ratio is almost off the charts at $234.64/$10.62 = 22.10.

Bottom Line:
Winning Trades: 5 | 62.5% | $50.53/share avg.
Losing Trades: 3 | 37.5% | -$3.80/share avg.
Average Trade: Gain of 106.5% | $30.15/share | Reward-to-Risk Ratio (R): 3.01

By the way, I use a 1% risk model for position sizing, which means the trade above was initially weighted at just 2.69% of my portfolio, so a 785.5% gain, while it might sound impressive, actually only contributes 21.12% to my overall gains.

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