Netflix Split: Waiting for the Dip and Using Options for a Cheaper Entry

about 1 month ago

"So guys, based on today's current price, if my middle assumptions occur, I'm going to get a 5% return on my money based on a discounted cash flow. To me, that says, you just got to wait. I have my watch list at 700. I might want to increase that to 800. That doesn't mean I'm buying it then, but I just want to be notified. Now, let's say you disagree with me and you say, 'I actually love Netflix at this price.' There's something I want to encourage you to look at, an options chain. You can basically get paid to buy Netflix at a cheaper price in the future. So, let's pick a month from now, 125. What we're going to do is sell puts."

The speaker explains that while Netflix's 10-for-1 stock split is merely cosmetic and does not alter the company's intrinsic value, investors should not chase the lower post-split price at face value. Instead, he recommends waiting for a dip to target levels around 700 to 800, or alternatively, using an options strategy (selling puts) to effectively lower the entry price, thereby aligning with his valuation approach.

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