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Netflix after the stock split: how investors can set their own entry price
Options 10 minutes to read
Koen Hoorelbeke
Investment and Options Strategist
Summary: Netflix’s lower post-split share price invites renewed interest, yet timing a purchase still matters. We explain a simple, structured way for investors to define the price at which they would be comfortable buying the shares.
Netflix after the stock split: how investors can set their own entry price
Netflix’s recent 10-for-1 stock split has brought the share price down from four digits to the low-$100 range. It is an optical change, not a fundamental one, but it naturally encourages investors to reassess how and when they would consider buying the stock. Lower prices often look more approachable, even though the company’s long-term prospects and valuation questions remain exactly where they were before the split.
For long-term investors who prefer to avoid rushing into the market, this environment offers a useful moment to explore a structured and patient way of entering a position. Rather than buying shares immediately at market price, investors can define the level at which they would feel more comfortable becoming shareholders and receive a small amount of income while waiting.
Understanding the stock split – and what it does in practice
A stock split multiplies the number of shares while dividing the price by the same factor. Netflix executed a 10-for-1 split, meaning one old share became ten new shares, and the share price was divided by ten. The company’s total value did not change.
Where investors may notice a difference is in position sizing. One options contract still represents 100 shares, but the notional amount behind those 100 shares is much smaller than before. This makes certain position-building techniques more accessible, especially for investors who previously found the stock’s high price a barrier.
Netflix has eased from recent highs, which often prompts the classic investor question: “Is this the right moment to buy, or should I wait?” A defined-price approach helps bring structure to that decision.
Setting a preferred entry point with a defined-price approach
Some investors prefer to buy only if the price comes down to a level they find more reasonable. Instead of placing a limit order and waiting passively, they can make a formal commitment to buy at that level in exchange for receiving income upfront.
This method uses a cash-secured put. The terminology is less important than the behaviour: you choose your price, reserve the cash needed to buy the shares, and receive income for being willing to take ownership if the market reaches that level. If the shares never fall that far, you simply keep the income.
After the stock split, capital requirements are more manageable, making this technique easier to scale.
A practical example: committing to buy Netflix at 107.50 USD
Important note: The strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it's crucial to make informed decisions.
With Netflix trading around 110 USD, an investor may prefer to target a slightly lower entry level. The 107.50 USD level offers a clear and simple illustration.
Using the prices shown in the trading ticket:
- Chosen level: 107.50 USD
- Income received upfront: about 117 USD
- Cash reserved for the commitment: 10,750 USD
- Commitment length: roughly eight days
- Approximate short-term yield on reserved cash: a little over 1% for the period
This yield is useful as context, but it should not be seen as a forecast. Short-term yields often look large because the timeframe is so brief and driven by specific volatility conditions around the split.
What happens at expiry?
If Netflix finishes above 107.50 USD
You keep the income and do not buy the shares. This is the most favourable financial outcome, although it means you do not establish the position.
If Netflix finishes below 107.50 USD
You buy 100 shares at 107.50 USD. After subtracting the upfront income, your effective entry price is around 106.33 USD. If the share price continues falling, your losses behave exactly as they would for any shareholder.
A balanced view: potential benefits and limitations
Potential benefits
- You define your preferred buying level rather than accepting the current market price.
- You receive income while waiting, providing compensation for your patience.
- Your effective entry level is slightly lower because of the upfront income.
- The approach brings structure and discipline to the decision-making process.
Important limitations
- You may end up buying shares during a market decline.
- Any losses after that point follow the normal behaviour of share ownership.
- The short-term yield reflects a specific moment and should not be extrapolated.
- Cash must remain reserved, which reduces flexibility in the portfolio.
This technique is best suited to investors who already see Netflix as a long-term holding and prefer a more controlled, less reactive approach to entering the position.
Takeaway
Netflix’s stock split changes the look of the share price but not the business itself. For investors who want exposure but prefer to set their own conditions, committing to buy at a chosen level — and receiving income while waiting — can offer a calmer, more deliberate way to approach the stock. It neither removes risk nor promises better outcomes, but it gives investors a structured decision at a time when headlines and market moves may create noise.
This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The Author is permitted to wait at least 24 hours from the time of the publication before they trade the instruments themselves.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.
This content will not be changed or subject to review after publication.
The Author is permitted to wait at least 24 hours from the time of the publication before they trade the instruments themselves.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.
This content will not be changed or subject to review after publication.
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