"Fading the bid" has been a popular move for investors in recent weeks, Don Kaufman, the founder of TheoTrade, told Schwab Network recently. Kaufman suggested an options play that bets on a fade by widely traded Netflix (NFLX) stock.

Kaufman Views on NFLX

"Netflix is breaking towards its all-time high, and that is usually the best place to short a stock," Kaufman said.

According to the longtime trader, NFLX is undergoing "a gamma squeeze." The latter phenomenon occurs when traders buy many calls on a name, forcing market makers to buy the stock and creating a positive, cyclical rally, Kaufman explained.

Kaufman thinks that the cycle will eventually end, creating a "wild" downturn by NFLX. Additionally, he believes that, if a recession begins in the U.S., NFLX's business model will take a significant hit.

Kaufman's Bearish Options Play on NFLX

The trader is buying $1,000 puts on NFLX that expire on July 18 and selling $990 puts that expire on the same day. He is paying net premiums of $2.90.

Those who utilize this options play will benefit significantly if NFLX drops, Kaufman said.

While we acknowledge the potential of NFLX, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.