Netflix, Inc. (NFLX) stock has taken a significant hit, down 27.9% from its peak in late October 2025. Investors aren’t too keen on its proposed acquisition of Warner Bros. Discovery. However, one way to play it is to short out-of-the-money (OTM) put options.
NFLX closed at $89.46 on Friday, Jan. 9, 2026. That’s down from $93.76 at the end of 2025, or -4.59% YTD. That’s no fun.
NFLX stock – last 3 months – Barchart – Jan. 9, 2026
As a result, put option premiums have soared. That makes them attractive to short-sellers.
For example, the Feb. 13, 2026, expiry period shows that the $85.00 put option exercise price, 5% below today’s price, has a midpoint premium of $2.66 per put contract.
That provides a short-seller an immediate income yield of 3.13% (i.e., $2.66/$85.00 = 0.03129). That is for a one-month-to-expiry put option.
NFLX puts expiring Feb. 13, 2026 – Barchart – Jan. 9, 2026
That means that an investor who secures $8,500 with their brokerage firm can enter an order to “Sell to Open” a one-month away put contract at $85.00. The account will then receive $266.
As long as NFLX remains above $85.00 until the close on February 13, the account won’t be assigned to buy 100 shares at $85.00 with $8,500 in collateral.
However, the delta ratio is over 0.32, implying almost a ⅓ chance that NFLX could fall to $85.00 in the next month. That is a little high.
Just to be conservative, it might make sense for more risk-averse investors to sell short the $83.00 put contract. It has a lower delta ratio of 0.2553, or a 25% chance that NFLX will fall to $83.00.
That premium is $1.93, which still provides a 2.33% one-month yield (i.e., $1.93/$83.00) to the short-seller of this put contract.
This does not mean that an investor has no risk. If NFLX falls below $83.00 or lower by Feb. 13 or before, the investor could end up with an unrealized loss.
However, the breakeven point provides some downside protection:
$83.00 – $1.93 income received = $81.07 breakeven (B/E) point
That B/E is 9.8% below Friday’s close…
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