NFLX High IV Rank

10/10/13

This is a purely high IV play. With the 2-month IV Rank at 98%, the inflated premiums offer up a nice Iron Condor. Normally this type of trade is opened around the 1st of the month so there are 45 DTE (days to expiration), but at that time the IV was 15 points lower.

• Iron Condor, NFLX @ 305.80
• STO -1 Nov 390 Call
• BTO +1 Nov 400 Call
• STO -1 Nov 215 Put
• BTO +1 Nov 205 Put
• Credit = 1.47
• Risk = 853
• ROR = 147 / 853 = 17% in 36 days

NFLX jumped this morning after I placed my order so the IC is a slightly off center. I chose the 90% OTM short strikes, and now the POT is 11% for the short Put and 24% for the short Call. As long as the underlying price stays centered in my IC I will hold until expiration. Otherwise, I'll look to close at 50% profit.

Update: 10/22/13

Last night, NFLX reported earnings of $0.52 on an estimated $0.485. It shot up over 30 points at open to a high of 389.16 but fell back to close out the day at 322.52. I closed out the put spread for .04.

• BTC Nov 215/205 P
• Debit = 0.04
• Net = 147 - 4 = $143

Update: 10/31/31

For the past 8 trading days NFLX has been hanging around the 320 mark so I closed out the call spread for .05.

• BTC Nov 390/400 C
• Debit =  0.05
• Net = 143 - 5 = $138
• ROR = 138 / 853 = 16% in 21 days

Closed.