Netflix stock has dropped 27.9% from its peak due to investor concerns about its proposed acquisition of Warner Bros. Discovery. However, shorting out-of-the-money put options could be a strategy to consider. NFLX closed at $89.46 on Jan. 9, down 4.59% YTD.

Put option premiums have risen, making them attractive to short-sellers. For example, a $85.00 put option for Feb. 13, 2026, has a premium of $2.66 per contract, providing a 3.13% yield.

Investors can sell short put contracts at $85.00 or $83.00, with respective yields of 3.13% and 2.33%. Breakeven points offer downside protection, with analysts maintaining high price targets for NFLX stock.

Despite concerns about the acquisition, NFLX looks undervalued. Shorting out-of-the-money puts could offer a good entry point, with potential for income and downside protection. Analysts have bullish price targets for NFLX stock.

Read more at Barchart: Netflix Stock Is Beaten Down