Netflix Puts Worth Shorting Here for High One-Month Yields

After a dip following earnings, Netflix (NFLX) stock has been on the rise and may be worth shorting out-of-the-money puts to set a lower buy-in price. The stock closed at $81.72 on Aug. 28, up 2.35%, and has risen over 20% in the past month since hitting a low of $67.60 on July 20. However, NFLX is still at its level from over three months ago, when it closed at $81.52 on June 3.

Despite strong results, Nvidia stock may be stuck in a range, and Micron Technology stock appears to be a potential contrarian opportunity. Analysts' price targets for Netflix are high, with the Yahoo! Finance survey at $93.66, Barchart's mean survey at $95.52, and AnaChart's at $108.38. The average price target is $99.19, over 17% higher than Friday's close.

Shorting out-of-the-money puts on Netflix could yield a one-month return of 1.626%, with a potential buy-in price of $77.50 - $2.52 = $74.98, which is 8.3% below Friday's close. If Netflix remains in a trading range, an investor could potentially earn almost 10% by repeating this strategy over six months, with an annual expected return of 19.5%, higher than the 17% expected return from holding Netflix shares.