What would be the least risky approach toward shorting a stock such as NFLX? Is there a way to eliminate the potential for unlimited loss? Perhaps there is a way to play the inverse and sell and hold?
You could limit loss by buying protective call options in the same way that a long investor may buy protective puts. You can sell and hold if you keep the short position at the same weight in your portfolio by covering on the way up. I really don't recommend this strategy. The least risky approach to shorting it would probably be to sell (short premium) call spreads, although if you really believe it's gonna tank you would not make a lot. Buying deep OTM puts would be the least risky in terms of capital at risk, if you think it will tank hard (although that is unlikely). You must write off the puts the second you buy them either way(especially mentally)