Netflix, Inc. [Nasdaq: NFLX, $342, up $4.66] is scheduled to release its fourth quarter earnings report today following the close of the market session. Consensus analyst estimates are forecasting earnings per share of $0.45 on overall revenues of $1.48 billion. The same quarter one year prior (Q4 2013) saw EPS of $0.66 on $1.18 billion in revenue.

NFLX shares are off by a modest 0.8% in 2015, but the stock has been trading in a bearish pattern since last September with sideways price action since March. The stock has traded in a 52-week range of $299.50-$489.29, with most of the bullish momentum occurring in the first quarter of 2013.

With Amazon’s new content seeming to gain popularity with viewers, it seems inevitable Netflix will suffer some decline in viewership. While the company looks poised to post another quarter of improved EPS, traders may shrug this off again (last quarter the stock fell nearly 20% following a report that included improved EPS numbers). The stock has fallen 2 of the past 4 quarters, and 4 of the past 8, with an average move of 16%.

This week’s NFLX Jan Weekly 337.5 Straddle is trading $35.70-$36.90, or implying a below-average move of around 10.7% Given the historical movement we’ve seen, this could offer an opportunity for weekly straddle buyers.

My Trade:

Buy this week’s NFLX Jan Weekly 310 - 300 Put Spread for ~ $2.40 (excludes transaction costs)

Risk: $240 Per 1 Lot    Reward: Up to $760 Per 1 Lot      Break-even (at expiration): $307.60

Greeks of this Trade:

Delta: Short

Gamma: Long

Theta: Short

Vega: Long

As always, I never will look to buy a spread that pays less than 3:1 on my risk capital.