Amid a sea of green in Tuesday’s trading session, Netflix (NASDAQ:NFLX) stood out like a sore thumb as one of the only stocks on my screen in the red.  At $215, and nestled beneath all the major moving averages, it’s a far cry from its glory days of being the momentum darling of the market.

Its chart looks vulnerable and additional selling pressure maybe in the offing (On Wednesday, it was off another 2%, despite the broad market rally).  Given the elevated volatility of late, options remain on the expensive side, dampening the appeal of buying put options outright.

But there may be a better alternative. The bear call spread is a vertical credit spread consisting of simultaneously selling a lower-strike call while buying a higher-strike call in the same expiration month.  The maximum reward is limited to the net credit received at trade inception and the maximum risk is capped at the distance between the strike prices minus the net credit.

Traders looking for bearish exposure to this beleaguered media stock may consider entering a September 225-230 bear call spread for around a $1.20 credit – i.e. sell to open the September 225 call while buying to open the 230 call.  The maximum reward is equal to the initial $125 received and the maximum risk is $375.

Source:  MachTrader

At the time of this writing, Tyler Craig had no positions on NFLX.