Research on the Impact of COVID-19 on Netflix Call Option Prices based on the Black-Scholes Model

Abstract

This research delves into the intricate relationship between Netflix call option prices and the influence of the COVID-19 pandemic, employing the Black-Scholes model to analyze the multifaceted dynamics at play. Set against the backdrop of the pandemic's diverse stages, the study seeks to unravel the correlation between external events and investment behaviors. Drawing on distinct temporal periods - pre-pandemic, pandemic, and post-pandemic - the research utilizes historical option pricing data to unveil the impact of COVID-19 on Netflix call option prices. The Black-Scholes model, a robust option pricing framework, forms the analytical backbone, enabling the quantitative assessment of option values during these dynamic periods. Findings reveal that during the pandemic phase, call option prices experienced a notable surge, mirroring heightened investor interest amid increased consumer reliance on streaming services. This trend aligns with the surge in Netflix's subscriber base during the same timeframe. However, post-pandemic, while subscriber numbers continued to rise, call option prices exhibited a decline, underscoring shifting investor sentiments as societies transitioned to a new norm. This research contributes valuable insights into the intricate interplay between global events, entertainment consumption, and investment landscapes. It validates the applicability of option pricing models in understanding pandemic-induced market fluctuations. As financial markets grapple with ongoing changes, the study's implications underscore the profound and adaptable nature of investment behaviors.