Netflix has proven resilient during the ongoing global trade war thanks to its international integration, subscription-based model and economic resilience. Households would give up many discretionary expenses before sacrificing Netflix. One of the larger constituents of the major indexes, Netflix has materially outperformed year to date ahead of earnings, which they report post-close. Unlike hardware-focused tech giants, Netflix operates a digital subscription service that minimizes direct exposure to tariffs on physical goods. Its global presence, with over 300 million subscribers across 190 countries, diversifies revenue streams and reduces reliance on any single market. Between 2020 and 2023, Netflix invested $6.8 billion in European productions. Investors may hope that by fostering local content and economic ties, the company can deter retaliatory measures such as digital service taxes (DST). Netflix's subscription model offers stability amid economic uncertainty. In a trade war, consumer budgets tighten, favoring affordable entertainment like streaming over dining out or traveling. The ad-supported tier, with 55% of new subscribers in the fourth quarter of 2024 opting for it, boosts revenue diversification and subscriber growth, further insulating Netflix from economic downturns. Netflix valuations defied gravity for years. Naysayers insisted that increasing content costs would match the company's rapid topline and subscriber growth, and profits would prove illusory. At the same time, bulls urged patience, favoring a growth-oriented strategy, insisting that the profit and cash flow taps would eventually turn on. That patience was rewarded. After years of ever-growing negative free cash flow, the tide turned in 2020. The company has generated over $17 billion in free cash flow since. The street consensus is $8.5 billion in FCF for FY2025 and $11 billion for FY2026. Less sensitivity to trade wars, relatively inelastic demand, and accelerating free cash flow growth are good reasons to like the stock. The only two issues are that 1) the company trades nearly 50x trailing EPS, and the market feels wobbly. As a significant constituent of the major indices, Netflix could face selling pressure from passive investors if the markets decline further. Additionally, the stock could face resistance at the recent all-time high of 1058.40. 2) Any management comments throwing cold water on the rapid free-cash-flow growth the street expects could hit the shares. How to trade it The options market is implying NFLX could move around 8% after it report. Over the past eight quarters, it has moved slightly more. If you are long the shares and are concerned about market choppiness, you could sell a covered call and use those proceeds to help finance the purchase of a downside put spread. For example, Sell May 30 1060 calls at $25.75; buy the May 30 950 put; and sell the May 30 875 put. A trade that would provide meaningful protection against an 8% down move while still providing upside participation back to the prior highs. For those interested in that payout, but not currently long the shares, selling the May 30 875 puts, buying the May 975 call, and selling the May 1060 calls — also known as a "call spread risk reversal" — would achieve a similar result. Remember that each contract represents 100 shares of Netflix, so one should be prepared to purchase $87,500 worth of the stock at that lower put strike Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. 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