nflx

Netflix (NASDAQ: NFLX - option chain) stock is trading lower today after the company reported some recent insider selling. According to SEC filings, NFLX Director Gregory Strangre sold over 19,000 shares of NFLX on Wednesday for $54.48 per share. He and other insiders have combined to sell more than $2.2M of NFLX stock in the past week, which could be interpreted as a bearish sign for the company. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on NFLX.

This morning, NFLX opened at $54.96. So far today the stock has hit a high of $55.84 and a low of $54.00. As of 11:50, NFLX is trading at $55.26, down $1.13 (-2.0%). The chart for NFLX looks bullish and S&P does not currently have a STARS rating for NFLX.

Best Buy Inc. (NYSE: BBY) has become a leader in DVD sales in the last half-decade, but the largest consumer electronics retailer in the U.S. may see that the future of the movie rental business is in downloading -- not discs.

Netflix Inc. (NASDAQ: NFLX) has been a pioneer in this space, as the largest DVD mail-order rental firm has begun embedding its software in Blu-ray players, set-top boxes, and other devices to stream digital content over the internet -- no disc needed. Best Buy apparently wants a little piece of that action.

Best Buy (NYSE: BBY) may be the world's largest electronics retailer, but it realizes that it faces a huge threat to a hefty chunk of its business. Apple (NASDAQ: AAPL) is moving plenty of movies and other soon-to-be former DVD fare through iTunes, staking a claim on a business that once belonged to Best Buy. The big box store is getting ready to fight back (finally?).

Using technology it's licensing from Sonic Solutions (NASDAQ: SNIC), Best Buy is opening an online store for movies and television shows. Best Buy CEO Brian Dunn says this move will expand the company's presence in services and will bolster company loyalty. That's the press release version, of course. The reality is that Best Buy needed to do something to protect this portion of its revenue and probably should have made the move several years ago.

Halloween, though not the blockbuster holiday that Christmas is, still results in some additional spending on the part of consumers as they stock up on candy and costumes, and maybe take in a scary movie or two. With those treats in mind here are some stocks that may give investors sweet dreams -- and hopefully not nightmares.

As is well known, candy is all the rage at Halloween, and among the largest candy stocks are Hershey Co. (NYSE: HSY) and Cadbury PLC (NYSE: CBY). Last week, Hershey reported third-quarter earnings rose 30% despite weaker volumes affected by higher prices for its sweets. Last year's numbers also included special charges. Still the company said it expects full-year earnings to be ahead of Wall Street forecasts. In 2010, the Pennsylvania company said it expects earnings excluding items to rise 6% to 8%. The stock has a forward-looking price-to-earnings ratio of 16 and a current dividend yield of 3.1%.

You got to hand it to Netflix Inc. (NASDAQ: NFLX). At a time when movie rental houses -- chief among them, rival Blockbuster Inc. (NYSE: BBI) -- are struggling to keep their doors open, Netflix is prospering, rolling out new initiatives and finding new ways for video-hungry consumers to watch movies.

On Thursday, co-founder and CEO Reed Hastings told investors on a conference call that the company will soon partner with another consumer-electronics maker to make streaming video available on more devices. That's on top of deals Netflix has already struck with Microsoft Corp. (NASDAQ: MSFT) and its Xbox, which expires next month, and Best Buy Inc. (NYSE: BBY), with its line of Insignia brand Blu-Ray disc players.

One thing you can say about Netflix Inc. (NASDAQ: NFLX), the DVD rental pioneer doesn't stand still. It has been innovating for years in bringing video content to consumers over as many mediums as it can. DVDs and Blu-ray discs are still the staple of its business, but Netflix can now be found embedded in newer Blu-ray disc players and even TVs.

No more waiting for discs to show up -- it can stream thousands of movies instantly to that living room flat screen television. So, it stands to reason that a house brand of leading consumer electronics retailer Best Buy Inc. (NYSE: BBY) will now come with Netflix technology built-in.

Netflix (NASDAQ: NFLX) is feeling a little heat from studios Time Warner (NYSE: TWX), News Corp. (NASDAQ: NWS), and General Electric's (NYSE: GE) NBC Universal. The major media companies would all like to make more money from Netflix's business model, according to BusinessWeek.

No one is really satisfied these days with the DVD industry. Growth in home video is no longer what it used to be. So content makers perceive a need to engage new strategies to offset the this lack of expansion. It would be nice if those strategies were confined to innovation in movie development and the reduction of project budgets. Instead, trying to negotiate more beneficial deals with distributors such as Netflix will probably be the focus of media execs.

Late Wednesday, Blockbuster Inc. (NYSE: BBI) scored a ratings upgrade from Standard & Poor's. The ratings agency raised Blockbuster's corporate credit rating from "CCC" to "B-" with a stable outlook. S&P commented, "The stable outlook reflects our belief that liquidity will remain adequate over the near term despite continued operational weakness and moderate deterioration of the company's credit protection metrics."

S&P's new rating is still six notches into junk territory, but the upgrade is nevertheless a vote of confidence in Blockbuster's refinancing efforts. On Monday, the video rental firm announced plans to offer up to $340 million in senior secured notes due 2014, and yesterday, Blockbuster said it would close up to 40% of its brick-and-mortar stores during the next two years.

Analyst upgrades:

• Wells Fargo transferred coverage of Cooper Industries (NYSE: CBE) with an Outperform rating, upgraded from the previous analysts' Market Perform rating. The firm believes commercial construction will be of less of a headwind for the company than the Street thinks, and has a $38-$41 valuation range on the stock.
• Kaufman Bros. upgraded SuccessFactors (NASDAQ: SFSF) to Buy from Hold after channel checks indicated demand trends picked up in July. The firm raised its target on shares to $15 from $12.
• UBS upgraded eBay (NASDAQ: EBAY) to Buy from Neutral and believes Marketplace transaction growth is "turning the corner." Additionally, the firm believes the secondary market represents a long-term opportunity for the company. The firm raised its target to $28 from $24.
• Novartis (NYSE: NVS) was upgraded to Buy from Hold at Jefferies.
• Arcelor Mittal (NYSE: MT) was upgraded to Buy from Hold at Citigroup.
• Cardinal Health (NYSE: CAH) was upgraded to Buy from Neutral at Goldman.
• Yahoo! (NASDAQ: YHOO) was upgraded to Outperform from Market Perform AMC Monday at Bernstein.

Netflix (NASDAQ: NFLX - option chain) stock is trading lower today on reports that Google (NASDAQ: GOOG) subsidiary YouTube is in talks with Lions Gate Entertainment (NYSE: LGF), Sony's (NYSE: SNE) Sony Pictures, and Time Warner's (NYSE: TWX) Warner Brothers about online movie rentals via the YouTube platform.

If the plan goes through, it could present a significant challenge to NFLX, which has a stranglehold on the streaming movie business right now. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on NFLX.

This morning, NFLX opened at $41.31. So far today the stock has hit a low of $39.27 and a high of $41.50. As of 12:00, NFLX is trading at $40.15, down $1.63 (-3.9%). The chart for NFLX looks bullish.

Netflix (NYSE: NFLX) closed at$44.87. NFLX is presenting at the Citi Tech Conference on September 9. NFLX September option implied volatility is at 42, December is at 47; verses its 26-week average of 52 according to Track Data, suggesting decreasing price movement.

American International Group (NYSE: AIG) closed at $26.64. AIG September call option implied volatility is at 101, puts at 116; verses its 26-week average of 112, according to Track Data, suggesting non-directional price movement.

Options Update: Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Analyst upgrades:

• Keefe Bruyette upgraded Popular (NASDAQ: BPOP) to Outperform from Market Perform as it believes the issuance of new common stock in exchange for outstanding preferred and trust preferred stock is a net positive. The firm has a $3.50 target on the stock.
• Merriman upgraded Super Micro Computer (NASDAQ: SMCI) to Buy from Neutral as if finds the currrent valuation compelling and believes the company should directly benefit from improving IT budgets. The firm thinks fair value is in the $9.11-$11.13 range.
• Kaufman Bros. upgraded Netflix (NASDAQ: NFLX) to Buy from Hold after its proprietary survey indicated the company is well positioned longer term. The firm finds the valuation on shares attractive at current levels and raised its target price to $53 from $48.
• Taleo (NASDAQ: TLEO) was upgraded to Buy from Neutral at Janney Montgomery.
• Boardwalk Pipeline (BWP) was upgraded to Neutral from Underperform at BofA/Merrill.
• Lloyds Banking (NYSE: LYG) was upgraded to Buy from Hold at RBS.

Blockbuster (NYSE: BBI) remains troubled. Just look at the second-quarter report that was released on Thursday after the bell. Net sales dropped over 20%, coming in at roughly $1 billion. The company lost 19 cents per share, one penny better than the loss reported in the year-ago period (to which I say, big deal!). According to the preview, the market wanted to see $1.1 billion for the top line and a loss of only 12 cents for the bottom line. A failure on both counts, I'm afraid.

Cash flow was the more attractive part of the Q2 story. The company calculated its free cash flow to be about $109 million. Okay, I'll give Blockbuster a good mark for having positive cash flow this year.

Not that long ago, Coinstar (NASDAQ: CSTR) was a sleepy business. Its retail kiosks helped with the mundane tasks like coin counting, money transfers, and so on.

However, the company has redefined its vision -- considering itself a big player in the automated retail category. And, it looks like the key to the strategy is its DVD rental kiosk platform, Redbox.

As seen with the latest quarterly results, Redbox is propelling growth. Revenues spiked 43% to $314 million, with profits going from $2.7 million, or $0.09 per share, to $7 million, or $0.23 per share. For the year, Coinstar expects revenues of $1.225 billion to $1.3 billion. Profits are forecasted at $0.80 to $0.86 per share.

Could this be the next logical step in the video war between Blockbuster (NYSE: BBI) and Netflix (NASDAQ: NFLX)?

A report contends that Netflix will soon offer its "Watch Instantly" video-streaming feature for the iPhone and the iPod Touch, as well as the Nintendo Wii gaming console. Netflix already allows subscribers to manage their movie queue and search for movies via their iPhones, so watching their choices on the smartphone would be the next logical step.