This Bearish Trade Might Work Best If Netflix Stock Is Fading

Core Insights - Netflix stock has shown declining relative strength since late June, breaking below key moving averages [1][6] - A bear call spread strategy is proposed, betting that Netflix will struggle to exceed a price of 1,260 by mid-October [1][3] - The bear call spread involves selling a call at the 1,260 strike and buying a call at the 1,265 strike, with a potential return of 40.8% [3][4] Financial Metrics - The bear call spread can be sold for approximately $1.45 per share, yielding a maximum gain of $145 for a 100-share contract [3][4] - The maximum loss for this strategy would be $355 if Netflix closes above 1,265 on the expiration date [4][5] - Netflix's current stock price is 1,208, indicating that it could rise by 4% and still allow the trade to achieve maximum profit [4] Market Position - Investor's Business Daily rates Netflix with a Composite Rating of 92, an Earnings Per Share Rating of 97, and a Relative Strength Rating of 82, ranking it first in the Leisure-Movies & Related group [6] - Despite strong fundamental ratings, recent technical breakdowns suggest potential near-term weakness for Netflix [6][7] - Analysts express concerns over Netflix's valuation, slowing subscriber growth, and rising content costs amid intense competition in the streaming market [7]