Selling cash-secured puts on NFLX

Selling a put transfers the downside between $69 and zero to you, and you are paid $1.45 per share for taking it. "Cash-secured" simply means you hold the $6,900 required to buy the shares instead of leaning on margin. Same position, honest denominator.

At August 28, 2026: above $69 the put expires worthless and you keep $145 — that is the maximum this trade can make, $145. Below it you're assigned 100 shares at $69, with an effective cost basis of $67.55 once the credit is applied. That is 5.8% below where NFLX trades today.

The engine puts the probability of keeping the full credit at 73% on NFLX at $71.71 with 36% ATM implied vol on the Aug 28 expiry. High win rate, capped payoff, uncapped-to-zero loss — the risk profile of every short-premium trade. It is not free money; it is a rent cheque for underwriting someone else's insurance.

The real-world failure mode is a gap, and NFLX has the catalysts for one: quarterly earnings — the only date that reliably matters. A put sold 3.8% out of the money offers no protection at all against a move twice that size overnight.

Assignment is not the loss — being assigned at $69 when NFLX is at $55.2 is. If you are running the wheel, that is the moment the plan is tested: you own shares at a basis of $67.55 and the market disagrees.

Early assignment is an operational risk rather than a market one: it arrives on a weekend, converts a defined structure into a stock position, and requires cash you may have allocated elsewhere.

Netflix pays premium sellers well for eleven weeks and takes it back in one evening. The structural trade is to sell the post-print month, when IV has been crushed but the stock has already made its move and has no catalyst until the next release — that is where the implied-to-realized gap on this name is actually positive, and it is the opposite of when the credits look most attractive.

NFLX's Aug 28 strikes are $1 apart near the money (1.39% of spot). On a ladder that wide, "pick the 0.30 delta strike" resolves to whichever rung happens to be closest — sometimes not close at all. 27k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 32 strikes on that expiry — 50% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Liquid around the money; the wings can be wide, and legging a four-sided structure here costs real money.

Skew is inverted: the 25-delta CALL implies 1.5% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Selling calls into an inverted skew pays better than usual and is riskier than usual for exactly the same reason. The term structure is flat inside 1.5% between the two captured expiries, so there is no calendar edge to harvest and no event visibly priced into one month over the other.

At 36% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $7.03 over 27 days — roughly −9.8% to +9.8%, or $64.68 to $78.74. The structure above sells the part of that distribution the market thinks it will not reach. Whether that is a good trade is entirely a question of whether 9.8% is too much or too little for NFLX over 27 days — the delta table cannot answer that, and neither can we.

What actually goes wrong here, as opposed to in general: Holding any short-vol structure through the print because the delta looked safe. The implied move on this name is routinely exceeded.