Netflix, Inc. has faced a substantial decline, with its stock dropping by 27.9% from its peak in late October 2025. The company’s recent proposal to acquire Warner Bros. Discovery has raised concerns among investors, contributing to a decrease in confidence and stock value. As of January 9, 2026, Netflix shares closed at $89.46, down from $93.76 at the end of 2025, marking a -4.59% change year-to-date.
With the stock under pressure, the premiums for put options have surged, creating opportunities for investors looking to short sell. The attractive nature of these out-of-the-money (OTM) put options could provide a strategic entry point for risk-tolerant investors. For instance, the put option expiring on February 13, 2026, with an exercise price of $85.00—approximately 5% below the current price—has gained attention. The midpoint premium stands at $2.66 per put contract, yielding a potential income of 3.13% for short-sellers.
To engage in this strategy, an investor would require $8,500 in collateral to initiate a “Sell to Open” order for the $85.00 put option. If Netflix remains above this price until expiration, the investor will not be obligated to purchase shares at $85.00. However, the investment does carry risks; the delta ratio for this option exceeds 0.32, indicating a one-third chance of the stock falling to $85.00 within the month.
For those seeking a more conservative approach, the $83.00 put option presents a lower delta ratio of 0.2553, suggesting a 25% chance of the stock reaching that level. This option’s premium is $1.93, translating to a 2.33% yield. While this strategy mitigates some risks, a decline below $83.00 could result in unrealized losses for the investor.
The breakeven point for the $83.00 put option is calculated at $81.07, which is 9.8% below the current closing price. Thus, Netflix would need to fall to $81.00 or lower for the investor to incur a loss. Furthermore, should the investor acquire shares through this strategy, they could also consider selling covered calls to offset potential losses while holding the shares in anticipation of a recovery.
Despite the current challenges, market analysts maintain a bullish outlook on Netflix. According to data from Yahoo! Finance, 43 analysts have an average price target of $125.71, representing an increase of over 40% from the latest closing price. Barchart’s mean analyst target is slightly higher at $127.82, while AnaChart.com reports an average target of $113.17 from 29 analysts, which is still 25% above the current valuation.
In a previous analysis published on October 24, 2025, it was suggested that Netflix could be valued at around $137.40 per share, based on its strong free cash flow and margins. This perspective reinforces the view that, despite the uncertainties surrounding the Warner Bros. Discovery acquisition, Netflix shares may currently be undervalued.
In conclusion, while the stock faces immediate challenges, the potential for recovery remains significant. Investors considering shorting OTM put options may find attractive yields and a strategic entry point to capitalize on Netflix’s future growth, pending it does not dip below critical price levels.
