DailyPlay – Opening Trade (NET) – December 19, 2025

NET Bearish Opening Trade Signal

Investment Rationale

Investment Thesis
We recently closed a bearish credit spread in Cloudflare Inc. (NET) for a quick profit, and we are looking to go back to the well with another bearish opportunity. While Cloudflare remains a high-quality business with a strong long-term narrative, the stock continues to trade at a premium that leaves little margin for error. As momentum fades and investors become more selective with richly valued software names, NET appears vulnerable to further downside or, at best, extended consolidation—creating an attractive setup for a defined-risk bearish options strategy.

Technical Analysis
Technically, NET is showing signs of deterioration following a failed breakout attempt near recent highs. The stock has rolled over and is now trading below its shorter-term moving averages, with the 20-day and 50-day trending lower and acting as overhead resistance. Relative strength has weakened, and RSI remains subdued, suggesting limited upside momentum. While the longer-term uptrend remains intact above the 200-day moving average, the near- to intermediate-term price action favors sellers, particularly if the stock struggles to reclaim the $200–$210 area.

Fundamental Analysis
From a fundamental perspective, Cloudflare continues to command a valuation premium versus its peers, driven by strong growth expectations, but profitability metrics remain less compelling. This imbalance increases downside risk if growth expectations moderate.

• Forward PE Ratio: 39.20x vs. Industry Median 24.89x
• Expected EPS Growth: 42.72% vs. Industry Median 13.67%
• Expected Revenue Growth: 16.81% vs. Industry Median 14.67%
• Net Margins: 8.41% vs. Industry Median 10.28%

Options Trade
To express this bearish bias, we are selling the NET Jan 23, 2026 200/210 call vertical for a credit of approximately $3.40. This defined-risk strategy benefits if NET remains below the $200 strike through expiration, allowing time decay to work in our favor. The trade offers a maximum reward of $340 against a maximum risk of $660, creating a favorable risk/reward profile given current technical resistance and elevated valuation. By positioning above key resistance, the structure provides a cushion against minor upside while targeting continued weakness or consolidation in the stock.

NET – Daily

Trade Details

Strategy Details

Strategy: Short Call Vertical Spread

Direction: Bearish Credit Spread

Details: Sell to Open 3 NET Jan 23 $200/$210 Call Vertical Spreads @ $3.40 Credit per Contract.

Total Risk: This trade has a max risk of $1,980 (3 Contracts x $660) based on a hypothetical $100k portfolio risking 2%. We suggest risking only 2% of the value of your portfolio and divide it by $660 to select the # contracts for your portfolio.

Trend Continuation Signal: This is a bearish trade on a stock that is expected to continue lower over the duration of this trade.

1M/6M Trends: Bearish/Mildly Bearish

Relative Strength: 4/10

OptionsPlay Score: 101

Stop Loss: @ $6.80 (100% loss to value of premium)

View NET Trade

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

PLEASE NOTE that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

View NET Trade