Netflix Shares Have Declined Significantly - Yet Selling Put Options Looks Appealing

Netflix Stock Faces Steep Decline Amid Acquisition Concerns

Shares of Netflix, Inc. (NFLX) have dropped sharply, falling 27.9% from their late October 2025 high. The market has reacted negatively to the company’s potential purchase of Warner Bros. Discovery. Despite this, some investors are exploring strategies such as selling out-of-the-money (OTM) put options to take advantage of the current situation.

On Friday, January 9, 2026, Netflix closed at $89.46, marking a 4.59% decrease since the end of 2025, when it was priced at $93.76. This year-to-date performance has disappointed many shareholders.

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NFLX Stock Performance Over the Last Three Months

Due to recent volatility, premiums on put options have surged, making them appealing for those looking to sell puts.

Profiting from Selling OTM NFLX Put Options

Consider the put options expiring on February 13, 2026. The $85.00 strike price, which is about 5% below the current share price, offers a midpoint premium of $2.66 per contract.

This translates to an immediate yield of 3.13% for the seller, calculated as $2.66 divided by $85.00, for a contract with one month until expiration.

NFLX Put Options Expiring February 13, 2026

For example, an investor who sets aside $8,500 as collateral can initiate a “Sell to Open” order for a one-month $85.00 put. This would result in a $266 premium credited to their account.

If Netflix’s stock price stays above $85.00 through February 13, the investor keeps the premium and is not required to purchase shares.

However, the delta for this contract is above 0.32, indicating there is nearly a one-in-three chance that the stock could drop to $85.00 within the month—a relatively high probability.

For those seeking less risk, selling the $83.00 put may be preferable. This contract has a delta of 0.2553, suggesting a 25% chance of assignment. The premium for this option is $1.93, which equates to a 2.33% yield for the month.

Managing Downside Risk

It’s important to note that selling puts does not eliminate risk. Should Netflix fall below $83.00 before or at expiration, the investor may face unrealized losses.

The breakeven for this trade is calculated as follows:

$83.00 - $1.93 = $81.07 breakeven point

This breakeven is 9.8% below the recent closing price of $89.46, meaning the stock would need to fall to $81.00 or lower before losses are realized.

If assigned, the investor would own 100 shares and could potentially sell covered calls to offset some losses. Alternatively, they could hold the shares in anticipation of a price recovery, making this a potentially attractive entry point.

Analyst Price Targets for NFLX

Despite recent declines, analysts remain optimistic about Netflix’s future. According to Yahoo! Finance, 43 analysts have set an average price target of $125.71, which is more than 40% above the current price.

Barchart’s analyst consensus is even higher at $127.82 per share, while AnaChart.com reports an average target of $113.17 from 29 analysts—still 25% above the latest close.

Additionally, an October 2025 analysis suggested Netflix could be valued at $137.40 per share, based on robust third-quarter free cash flow and margins.

Key Takeaways

In summary, although there are concerns about Netflix’s acquisition plans, the stock appears undervalued at current levels.

Investors looking for alternative strategies might consider selling out-of-the-money puts to set a lower entry price and generate income.

Currently, a one-month put contract 5% below the market yields 3.13%, while a 7.2% OTM put offers a 2.33% yield. The breakeven for the latter is nearly 10% below the current price, providing a favorable balance of risk and reward for those selling puts.