The attacker has yet to start a Premier League game for Arsenal this season and looks certain to depart when the transfer window reopens in January.
But Walcott thinks that he is still good enough to play for a top six club and only wants to leave temporarily.
Everton and Southampton are both interested in taking the 28-year-old away from north London as they look to save their respective seasons.
But his wages of £100,000-a-week would prove a huge stumbling block to both.
So according to Football London, Walcott is only willing to move if he remains an Arsenal player and goes out on a six-month loan.
The report states that the forward is happy to spend the rest of the season away from the Gunners.
But he wants to only put himself in the shop window for a potential move in the summer to a Champions League chasing outfit.
Southampton have just come into money after selling Virgil van Dijk to Liverpool for £75million.
But even Walcott’s high wage demands would put them off keeping him permanently.
Meanwhile, Everton boss Sam Allardyce has already admitted his desire to bring in a striker in January.
However, he may not have to funds to play with and will be looking for a short-term solution.