Netflix woes setting up for a Hollywood ending, says trader Mike Khouw

In this article Follow your favorite stocks watch now VIDEO 6:28 06:28 How options traders can take advantage of the valuation gap in this media stock…

Published Mon Jul 27 2026 17:25:45 GMT+0000 (Coordinated Universal Time)

Source: CNBC

Netflix woes setting up for a Hollywood ending, says trader Mike Khouw

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VIDEO 6:28 06:28

How options traders can take advantage of the valuation gap in this media stock

Netflix’s stock price may have lost the plot, but its fundamental narrative remains intact. Trading at 18.9x forward earnings — down near its 2022 bear-market trough ( 1.5% standstill return over 25 days (>20% annualized) via a defined-risk covered strangle.

### The Investment Case

When [Netflix](https://www.cnbc.com/quotes/NFLX/) stopped highlighting subscriber adds to focus on revenue, margins, and free cash flow, growth investors departed — and value investors haven’t fully arrived because legacy media like Disney ( 20% annualized).

**Risk Profile:**

* **Profitable Range:**$63.90 to $79.10 (brackets ~9% downside and ~13% upside). * **Upside Risk:**Capped at 10 points by the August 88 call. * **Downside Risk:**If assigned below $65, your effective entry is $63.90 (~17x forward earnings)—a compelling entry price near 2022 valuation lows.

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