Why This Trader Might Short Netflix Into Earnings

Editor's note: A previous version of this article stated Fari Hamzei said he recommended shorting Netflix into earnings. In reality, he said he'd "most likely" short the stock before earnings.

On Wednesday's #PreMarket Prep, Hamzei Analytics Founder Fari Hamzei said "most likely," he'll take a short position in Netflix heading into earnings.Netflix, Inc. (NASDAQ: NFLX) heading into earnings. While he has not yet developed a specific strategy before tonight's report, he did note 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 Wall Street firms are typically late to the party. Over the past month, these upgrades have helped move Netflix 7 percent higher.

Shares traded recently at $472.61, down 1.2 percent on the day.

Related Link: When Netflix Analysts Attack: What 7 Experts Are Saying Before Earnings

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.

Listen to the full interview below: