Netflix (NASDAQ:NFLX), like the rest of the market, has gotten a bit frothy lately. NFLX stock is up 114% so far this year, outstripping all of it’s peers on the S&P 500 Index. The question many investors have to ask themselves this week is: Can NFLX stock extend its rally after Monday’s earnings report?

It’s not an easy question to answer. NFLX stock is clearly a momentum play for any right-minded bull heading into next week’s report. With a price-to-earnings ratio of more than 280, how could it be anything else? The stock’s lofty heights have even started to weigh on some Netflix bulls.

This morning, UBS downgraded NFLX stock to “neutral” from “buy.” Analyst Eric Sheridan said in a note to clients that all the positives Netflix has going for it are already priced into the shares. Sheridan still lifted his price target to $425 from $375 though, adding a bit of a mixed signal to the downgrade.

The rest of Wall Street remains decidedly bullish on NFLX stock. According to Thomson/First Call, 25 of the 41 analysts following the shares rate them a “buy” or better. The consensus 12-month price target rests at $371.76, however, and could see some more upward revisions either ahead of or after earnings.

Click to Enlarge As for Netflix’s earnings report, Wall Street is expecting a profit of 79 cents per share, up significantly from the 15 cents per share it earned in the same quarter last year. Revenue is expected to rise 41.4% to $3.94 billion.

Real expectations may be higher, however. EarningsWhispers.com reports a second-quarter whisper number for Netflix at 81 cents per share. Should Netflix surprise to the upside and meet this whisper number, the ensuing rally could send NFLX stock north of $500 in a hurry.

But subscriber growth will, once again, be the big story for Netflix. Analysts are worried that the U.S. market may be oversaturated, and that geopolitical issues will slow international growth. Netflix is  currently in roughly 56% of U.S. broadband households and 46% of total U.S. households. Internationally, Netflix’s subscriber base is growing rapidly in India and elsewhere.

Turning to the options crowd, July implied volatility is pricing in nearly a 10% move for NFLX stock following next week’s earnings. This places the upper bound at $458 and the lower bound at $378. In the end, NFLX still has plenty of momentum — even UBS admitted that with its price-target increase. Here’s how to play a post-earnings surge.

2 Trades for NFLX Stock

Call Spread: For those looking to play NFLX’s momentum so far this year, a July $440/$450 bull call spread has the potential for doubling your investment. At last check, this spread was offered at $3.11, or $311 per pair of contracts. Breakeven rests at $443.11, while a maximum profit of $6.89, or $689 per pair of contracts — a potential return of 120% — is possible if NFLX stock closes at or above $450 when July options expire at the end of next week.

Put Sell:  Alternately, if market volatility or an ill-timed Donald Trump tweet worries you, a July $350 put sell has a high probability of finishing out of the money. At last check, this put was bid at $1.53, or $153 per contract.

As usual with a put sell, you keep the premium as long as Netflix stock closes above $350 when July options expire. On the downside, if NFLX trades below $350 prior to expiration, you could be assigned 100 shares for each put sold at a cost of $350 per share.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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