NFLX Options Signal Deepening Bearish Sentiment: Put/Call Ratio Hits 1.3 as $1165 Puts and $1260 Calls Highlight Key Risk/Reward Zones

• NFLX trades at $1200.73, down 0.82% from $1210.61, with intraday range of $1187.54–$1224.44
• Options put/call ratio at 1.29 (put OI: 283,580 vs call OI: 218,903), signaling bearish positioning
• RSI at 41.76 (oversold) but MACD -2.13 (bearish divergence) suggests potential for further downside

The NFLX options market is flashing a bearish warning light as put open interest (OI) dominates the short-term strike map. With the put/call ratio at 1.29—the highest since the 2023 earnings slump—investors are aggressively hedging against a potential breakdown below key support levels. This setup creates a high-probability trade at the $1165 put strike while also highlighting a critical risk/reward imbalance in the $1260–$1265 call range. The stock’s current price near the 30D MA of $1221.81 suggests a pivotal juncture between short-term bearish momentum and long-term range-bound consolidation.

Bearish Imbalance in OTM Options: A Tale of Two Strikes

The options chain reveals a stark divergence in positioning between puts and calls. For Friday expiration, the $1165 put (OI: 1,205) dwarfs the nearest call at $1260 (OI: 1,622), creating a 1.35 put/call ratio at the top of the chain. This imbalance suggests institutional players are preparing for a 7.5% move below current levels, while bullish sentiment remains concentrated in the $1260–$1265 range. The $1165 strike aligns with the 200D support band (971.40–981.62) projected downward, indicating a potential 12% downside target if the short-term bearish trend extends.

The next-week chain amplifies this bearish bias, with $1145 puts (OI: 914) outpacing $1300 calls (OI: 791) by a 1.15 margin. This suggests positioning for a potential 8.3% decline by October 21—coinciding with Q3 2025 earnings release. While block trades are absent, the concentrated OI at these strikes indicates strategic hedging rather than speculative bets.

News Flow: Strategic Growth vs. Near-Term Execution Risks

Netflix’s recent news flow presents a mixed bag for investors. The 15-year carbon credit partnership with AFF and co-marketing deal with AB InBev reinforce long-term ESG and revenue diversification goals. However, insider selling by CFO Neumann (41% stake reduction) and director Hastings (98.5% stake exit) introduces near-term uncertainty. The Zacks downgrade to "Hold" and Loop Capital’s "Buy" upgrade reflect divergent views on content spend sustainability.

The most critical near-term risk lies in margin pressure from increased content spending. While Q3 guidance was raised, the CFO’s exit and product officer Kim’s departure signal potential operational friction. These factors align with the bearish options positioning, as investors price in execution risks ahead of the October earnings report.

Actionable Trade Setups: Hedging the Bearish Bias

For options traders, the $1165 put (OI: 1,205) offers a high-probability play if NFLX breaks below the lower Bollinger Band at $1180.17. This strike provides 12% downside protection at a 1.3x risk/reward ratio. For those seeking upside potential, the $1260 call (OI: 1,622) could act as a volatility play if the stock rebounds above the 30D MA. However, the RSI at 41.76 suggests oversold conditions may not yet justify bullish bets.

Stock traders should consider entry near $1187.54 (intraday low) if support holds, with a target at the middle Bollinger Band ($1221.61). A stop-loss below $1180.17 would limit risk to 7.3%. For a more aggressive play, the $1224.44 intraday high could serve as a short-term resistance level for a mean-reversion trade.

Volatility on the Horizon: Navigating the Earnings Crossroads

The coming weeks will test NFLX’s ability to balance its aggressive content strategy with margin preservation. With the options market pricing in a 12% downside risk and the stock trading near its 30D MA, the October 21 earnings report will be pivotal. A breakdown below $1180.17 could trigger a cascade of put options at the $1165 strike, while a rebound above $1224.44 might reinvigorate the 200D MA at $1087.44 as a long-term support level. Traders should monitor the $1260–$1265 call range for signs of institutional accumulation that could signal a reversal in sentiment.